China wine market


China's wine market in 2012 was valued at just over US$10 billion with a market size volume of around two billion litres. The market is forecast to grow at a Compound Annual Growth Rate (CAGR) of 10 percent through till 2016 to reach close to US$19 billion and well over three billion liters.

 

The growth in China's wine market has been driven by the growing influence of Western eating and drinking habits, and rising average incomes in China, particularly among the young and wealthy Chinese consumers in urban centres and the elite in China. This is due to consumer perceptions of wine being a fashionable drink, as well as the symbolic associations of wine with class status.

 

The urban population of China was 691 million by the end of 2011. It is estimated that 178 million urban Chinese are potential wine consumers and as this number grows, China's wine market offers attractive opportunities for business investors. It has been estimated that Chinese consumers aged between 25 and 44 are the largest consumer segment, representing more than half of the market. Consumers over 50 have been considered to drink the least amount of wine.

 

While imports from well-established wine producing countries is significant, China has recently seen rapid expansion of its domestic vineyards, and the development of a domestic wine making industry. Currently, there are over 500 wineries in China.

 

The Chinese market is fairly fragmented with the presence of numerous players. The fast-growing market is attracting a number of domestic entrepreneurs, foreign manufacturers and importers v. The key players in the market in terms of market volume are Yantai Changyu, with just over 21 percent, COFCO Ltd (over 17 percent), Dynasty Fine Wines (about 10 percent), Yantai Weilong Grape Wine Co Ltd (about seven percent) while remaining players comprise about 45 percent of the market.

 

The control and elimination of adulterated wines is still the most important thing for the long term development of wine sales in China. Currently, adulterated wines are commonly available in entertainment establishments, such as bars and pubs, and are also believed to have a presence at wine specialists. For most Chinese consumers who find it hard to distinguish fake brands, adulterated wines will lower people's confidence in wines and threaten the long-term development of the wine market.

 

Chinese consumers are becoming more knowledgeable about grape wines. Their tastes will become more sophisticated as more information becomes available to educate consumers on wine varieties, product and brand availability, and the matching of different wines to food.

 

The use of business-to-consumer websites is booming and is expected to boost grape wine sales through frequent price promotions and more wine information. Wine information, such as wine and brand history and taste features, are listed on these websites to help consumers select wines.Imported wine are warmly welcomed by Chinese consumers and are perceived as being of high quality with a better taste, particularly those from France and Italy, which have enjoyed high recognition due to its inherent image and higher levels of promotion.

Consumers have also shown a preference for fruitier and fuller flavours of New World wines at blind tastings. Concerns over adulterated wine, and growing health and safety awareness, will drive consumers to rely on trusted international brands that have been sourced from reliable destinations.

 

The control and elimination of adulterated wines is still the most important thing for the long term development of wine sales in China.

Currently, adulterated wines are commonly available in entertainment establishments, such as bars and pubs, and are also believed to have a presence at wine specialists.

 

For most Chinese consumers who find it hard to distinguish fake brands, adulterated wines will lower people's confidence in wines and threaten the long-term development of the wine market.

 

Chinese consumers are becoming more knowledgeable about grape wines. Their tastes will become more sophisticated as more information becomes available to educate consumers on wine varieties, product and brand availability, and the matching of different wines to food. The use of business-to-consumer websites is booming and is expected to boost grape wine sales through frequent price promotions and more wine information. Wine information, such as wine and brand history and taste features, are listed on these websites to help consumers select wines.

 

China's wine market will continue to register double-digit percentage growth figures in the forecast period due to rising affluence of the middle income class in urban centres and increasing adaptation of Western dining habits. However, wine sales will eventually slowdown in the long term due to increasing market saturation and intense competition.

 

Imported wine are warmly welcomed by Chinese consumers and are perceived as being of high quality with a better taste, particularly those from France and Italy, which have enjoyed high recognition due to its inherent image and higher levels of promotion. Consumers have also shown a preference for fruitier and fuller flavours of New World wines at blind tastings. Concerns over adulterated wine, and growing health and safety awareness, will drive consumers to rely on trusted international brands that have been sourced from reliable destinations.

 

Leading brands in the market are Changyu (about four percent), Great Wall (just over three percent), Guyve Longshan (just over two percent), Weilong (two percent) and Kuai Ji Shan (about two percent).

 

Domestic brands still lead Chinese grape wine sales, while for non-grape wine, both domestic and international brands are widely available throughout China.

 

The main distribution channel for volume sales is through 'on-premises' consumption particularly at top end hotels, restaurants, bars and nightclubs.

 

This accounts for about 35 percent of total market volume, followed by supermarkets and hypermarkets (about 20 percent) and specialist retailers (14 percent).

 

Non-grape wines dominated the market with approximately 55 percent market share in volume terms. Within the grape wine segment, still wine is a dominant player with over 95 percent of total market value, followed by fortified wine (three percent), champagne (one percent) and sparkling wine (one percent).

 

Still red wine is the fastest growing among the still wine segment, showing more than 20 percent in volume sales, while white wine registered close to 19 percent growth vi. Red wine is one of the major grape wine types in China, being more suitable for Chinese dishes and consumed as a table wine, particularly in Western style restaurants. The growth in white wine sales has been mainly driven by female consumers switching from red wine and beer to white wine, for its refreshing and lighter qualities. White wine has been increasingly used in the mixtures with soft drinks like Sprite.

 

Cabernet Sauvignon is the major grape type in red wine and accounted for nearly 40 percent of still red wine sales, followed by Merlot (17 percent) and Cabernet Franc (10 percent). Chardonnay accounted for about 43 percent of still white wine sales. Chinese people are becoming more curious about new flavours, leading to a greater presence of new grape types. Therefore, less acidic grape wines with fruit flavours such as Merlot and Riesling are gaining shares.

 

While still rosé wine sales have surged in recent years as a result of increased media coverage, trade missions, and growing availability of imported still rosé wine, it remains a small sector due to factors such as few local producers, low product awareness and negative consumer perceptions of its quality.

 

Sparkling wine grew by over eight percent and is often used to celebrate special occasions, particularly weddings. However, while growth is expected to be fast, volume sales continue to be insignificant. Ice wine is becoming a new status symbol, but remains a small sector with inadequate data for the market size. Most imports for ice wine are from Canada.

Import and exports
  • China imports a total value of 365.5 million litres (US$1.4 billion) of fresh grape wine, representing growth of approximately 28 percent in volume terms (80 percent in value). Over 74 percent of China's wine imports are from the France, Australia and Chile, which are the top three importers by value. Imports are expected to account for 20 percent of domestic demand due to high raw material prices, lower import tariffs for bottled wine and a rapid increase in wine consumption. 
  • France has been China's main trading partner for wine and this is expected to continue. Bordeaux wine has proven popular in China, and China has become the world's second largest importer of Bordeaux wine by volume.
  • China was New Zealand's sixth and seventh largest export destination for wine, in terms of value and quantity, respectively. Wine exports totalled around US$18 million or approximately two million liters, representing an increase of 87 percent and 62 percent, respectively.
  • The top three countries with the fastest growth in volume exports of bottled wine to China were New Zealand, Spain and South Africa. However, the three countries together accounted for about only nine percent of total bottled wine imports.
  • Imported wine are warmly welcomed by Chinese consumers and are perceived as being of high quality with a better taste, particularly those from France and Italy, which have enjoyed high recognition due to its inherent image and higher levels of promotion. Consumers have also shown a preference for fruitier and fuller flavors of New World wines at blind tastings. Concerns over adulterated wine, and growing health and safety awareness, will drive consumers to rely on trusted international brands that have been sourced from reliable destinations. 
  • The control and elimination of adulterated wines is still the most important thing for the long term development of wine sales in China. Currently, adulterated wines are commonly available in entertainment establishments, such as bars and pubs, and are also believed to have a presence at wine specialists. For most Chinese consumers who find it hard to distinguish fake brands, adulterated wines will lower people's confidence in wines and threaten the long-term development of the wine market.
  • Chinese consumers are becoming more knowledgeable about grape wines. Their tastes will become more sophisticated as more information becomes available to educate consumers on wine varieties, product and brand availability, and the matching of different wines to food. The use of business-to-consumer websites is booming and is expected to boost grape wine sales through frequent price promotions and more wine information. Wine information, such as wine and brand history and taste features, are listed on these websites to help consumers select wines.
  • (Source: New Zealand Trade & Enterprise)