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Imports down in China but drinkers trade up

Published:  11 June, 2019

The volume of wine imported by China has fallen for the first time since 2014, according to the latest Wine Intelligence report.

“At a quick glance, 2018 may look like a rough year for members of the Chinese wine trade as imported wine volume experienced its first decline since 2014, by 8%,” said Wine Intelligence project manager Ya-Ting Fan.

“The market seemed to be fragmented as more players entered, while the growth of the wine drinking population slowed down as well, with consumers drinking less frequently than they were before.”

However, in an “increasingly diverse” market, the value of the Chinese market has remained stable as consumers “rein in consumption frequency for informal occasions, but grow more used to trading up” and are more open to other regions other than France.

While this means French wine has lost some momentum it remains the market leader. Wines from Australia, Chile, Italy and South Africa have all experienced growth over the past three years. The US is the only major producer to see declines, though the report says this is not the result of escalating trade tension between the US and China.

“The Chinese wine market is diversifying,” said Fan. “Over the past few years, there has been significant growth from a small base in wine volumes from different countries of origin. France is still the leader of the market, but its share of the market is gradually declining as Australian wines continue to show strong growth, driven by their more highly branded offerings.

“Wines from Chile and Italy are also experiencing growth. On the channel level, we see trade people exploring different options to reach out to consumers, with the aid of internet and social media platforms.”

In terms of consumption, red, white and rosé wines have stayed stable, though sales of sparkling wines have slowed. As for brands, Lafite, Yellow Tail and Penfolds are the most powerful imports, while Rawson’s Retreat is performing “significantly stronger” than it did in 2018. However, Casillero del Diablo underperformed on 2018, dropping from 6th to 11th place.

Meanwhile online sales are up, with 46% of consumers saying they have bought wine from online stores.

“E-commerce is perhaps another factor contributing to the spread of wine appreciation culture in China,” said Fan.

“A reason as to why consumers purchase wine online include the diversity of options available both brand and varietal wise. Interestingly, the fact that online retailers offer better and cheaper wines is now less of a motivational factor for consumers to buy online. In line with their increased spend online, this is yet another sign that consumers are ‘trading-up’ for better quality and sophisticated wine.”

Research for the report included speaking to 4,000 Chinese wine drinkers between 2017 and 2019, and five industry professionals in the Chinese wine trade in May 2019.