Posts Tagged ‘China’
Jody may not be the world’s biggest fan of baijiu but our Editors track liquor and wine consumption in China very closely. The Middle Kingdom has become the new epicenter of wine consumption and a slow down here could have effect far and wide.Fortunately many new e-commerce channels are opening n China so we’re pretty excited t see what kind of pioneering online wine sales will come from the likes of Alibaba and more.
China is on every wine producer, distributor and lover’s mind. It has and will continue to change the world of wine. Frankly China wine will continue to be a huge story in the years to come and this is a region that the Editors of Wine Portfolio have long focused on. Why? Because we love opening up new consumers to the world of wine. And so we are proud to present this exhaustive report of wine in the Middle Kingdom.
Recent years have seen substantial growth in Chinese grape wine market. From 2001 to 2012, the grape wine output in China had shown an upward trend with the CAGR of 16.5%. However, the 18th CPC National Congress called on the restriction of spending by central government bodies on official overseas visits, official vehicles, and official hospitality, “six bans”, and alcohol prohibition in the military, leading to the slowdown of growth or even decline in China grape wine market. In 2013, the output and consumption of grape wine in China went down by 4.7% year-on-year and 13.7% year-on-year, respectively.
By region, the consumption in China grape wine market varies a lot in terms of development. For now, China’s southeast coastal regions, including Shanghai, Guangdong, Fujian and Zhejiang where are economically developed, have achieved provincial-level market scale valuing RMB1-3 billion, city-level market scale valuing RMB100 million, and county-level market scale valuing RMB10 million. However, in the north and the vast central and western regions, the grape wine consumption is still at a stage of market incubation, with the exception of such cities as Beijing and Chengdu.
Due to the restriction of weather and geographical conditions, the grape wine production in China demonstrates higher regional concentration. In China, there are just three provinces and municipalities seeing the annual grape wine output of 100 million liters or more. Among these, the largest grape wine producers come to Shandong (the Bohai Bay area) and Jilin (Tonghua), with the combined output in 2013 amounting to 712 million liters or 64% of the national total. In Shandong, Chardonnay, Carbernet Sauvignon, Merlot, and Carignane are major grape wine varities. Also, planting bases of homegrown grape wine producers like CHANGYU, Great Wall and Dynasty are located in Shandong.
With China’s accession into the WTO, China’s import tariff on grape wine was reduced from 65% to 14%, bringing a large inrush of foreign wines into the Chinese market. In 2012, the wine import volume of China reported 394 million liters, equivalent to 2.4 folds of the figure in 2008. In 2013, the Ministry of Commerce launched anti-dumping and anti-subsidy investigations on made-in-EU wines. Together with the impact brought by the government call to restrict the spending by the central government bodies on official overseas visits, official vehicles, and official hospitality, China’s total import volume of grape wine witnessed a year-on-year decline of 4.5%. In 2013, China’s import volume of bottled wine accounted for 74% of the total, with France as the major import origin.
China grape wine industry is to enter into a stage for structural adjustment after 2013 (for instance, de-stocking targeting wine dealers, grape wine producers’ orientation to low-and medium-end market), in order to pop the market bubble for a comeback to the right track. It is estimated that the CAGR of grape wine consumption in China between 2013 and 2016 will post 9.7%.
Wines from Spain and the New World are gaining ground in China at the expense of their French counterparts, as increasingly adventurous Chinese wine enthusiasts push back the frontiers of a surging market, say experts. Exports of Spanish wines surged…
Again we’re happy to have beat our friends at CNN to the story of wine in China. In 2010 we mounted 3 trips to China to explore the nascent wine scene and bring the growing Chinese wine movement to our community. And this is a story we’ve continued to follow. Now a new documentary aims to show how Chinese consumers are now the largest importer of Bordeaux wine and what this will mean for the rest of the world.
How will the emergence of China as a world player in the world of wine affect the drink we all love so much?
China has become a hot destination for global players in the wine industry with demand growing in excess of 20% annually for the past five years to around 1, 480.6 mn litres. That makes China a significant player in the wine industry.
And so with China’s elite investing in Bordeaux chateaus and setting new records for rare and collectible wines at auction, it’s no wonder that the wine industry is paying close attention to happenings in the middle kingdom. But what about wine drinkers? Are we giving enough thought as to how the newly minted middle and wealthy classes in China will change the world of wine? I don’t think so, but fortunately our editorial team is here to help.
First off, let’s put China’s foray into the wine industry into perspective. China is already the world’s leading market for luxury goods, and fine wines are no exception. China, including Hong Kong, became the world’s largest consumer of Bordeaux wines in 2010, importing some 33.5-million bottles at a cost of $475-million. The country now imports more than $1-billion worth of wine annually, a number that has quadrupled from about $250-million in 2004.
French wine occupies a commanding position in the Chinese market. The French have a significant market share and mind share lead over other regions. Partly this is because of their storied reputation and strong marketing, but French producers have also worked to form deep distribution partnerships since the early 1980s. And this matters since business in China is a patient endeavor and requires investing in long term relationships. This is something the French have done exceedingly well and so their dominant position isn’t likely to change anytime soon.
So with this in mind we wine drinkers can expect a few ripples on our side of the world. First off French wine and collectible wine will probably continue to set new records at auction in both Hong Kong and London. After all the industry is globally interconnected. Next, we can expect additional Chinese investment in Bordeaux and other French regions. This will divert more French product from North American shelves onto Chinese ones and will probably result in modest price increases here at home. This will most likely lead to a small decrease in the North American market share for French wine which should open up opportunities for other producers. And that’s probably good news for Spanish, German and Austrian winemakers.
In the years to come China will continue to change the world of wine and we will continue to bring you our thoughts on how this will affect you. We are stoked at the significant growth in the Chinese wine market and we think this is a very positive trend. So stay tuned because there’ll be more updates on this very dynamic region.
In the meantime what are your thoughts on how China will change the world of wine?
Those who’ve reveled in the streets of Beijing or Shanghai will remember their encounter with baijiu, a strong white liquor that may be called China’s national alcoholic drink. Visitors are often told by old Chinese hands not to sniff the stuff first. It is time-tested counsel, and the disregard of it can easily lead to the drink’s vapors causing the involuntary contraction of the muscles lining the throat. Such a whiff can derail the main event—when the clear liquid passes from mouth to throat with a burning surely only equivalent to that achieved by taking a pull on a bottle of industrial solvent, the watery eyes, the accompanying look of disgust, and the lingering flavor of some petroleum-derived fuel. It’s an acquired taste, as they say.
Fortunately for the palates of intrepid international quaffers, baijiu is not the only potent potable to have a long history in the middle kingdom. The Chinese have for centuries been growers of grapes and, people being what they are, drinkers of the fermented alcohol elixir that arises when those grapes are let to sit too long. And over the last century, Chinese vineyards have been working on their craft to produce wines that can stand on their own against others from around the world.
And in the last decade Chinese winemakers, now numbering some 400 across the country, have seen a boom in business. Demand is coming both from the burgeoning domestic middle class who see wine as a mark of success and elegance and also from foreign drinkers who are interested to try Chinese chateaux. Rising interest led the Chinese government in 2005 to plant more grape plants and provide greater acreage to wine production. That investment is beginning to pay off.
According to the Wine Institute, China made 14.5 million liters of the beverage in 2008, making it the seventh largest producer in the world and far surpassing any other Asian country. In fact, it produced more than Germany, South Africa, and Chile. That number also represented a rise in Chinese investment in the industry, with the country’s annual wine production increasing by almost 24 percent compared to 2004. An industry research group projected that Chinese wine production would increase by some 77 percent from 2011 to 2015, totaling 128 million cases per year by the end of the period.
Sun Hongbo, the general manager of Chateau Changyu, one of the world’s largest producers, said his company alone produces more than 30 million bottles of wine annually.
Some big names in the wine business have been helping the Chinese get up to speed in exchange for a lucrative foothold in the expanding domestic market. To name just one, Chateau Lafite Rothschild partnered in 2009 with a Chinese state-owned firm to grow grapes on 60 acres of land in Shandong Province.
But it almost goes without saying in the wine industry that quantity does not equate to quality. According to UK wine merchant and industry watcher Berry Bros. & Rudd, China is positioning itself not just to take the lead in production but also to compete in the quality category with some of the world’s great viniculture regions.
“China is set to establish itself as a leading producer of volume wine, but Berry believes China also has all the essential ingredients to make fine wine to rival the best of Bordeaux,” the company said in its annual Future of Wine report.
Jasper Morris, a holder of the British Master of Wine qualification, said in the Berry report, “I absolutely think China will be a fine wine player rivaling the best wines from France. It is entirely conceivable that, in such a vast country, there will be pockets of land with a terroir and micro-climate well suited to the production of top quality wines.”