The potential of the Chinese wine industry
March 25, 2013
Although China is known for its tea and baijiu (Chinese alcoholic beverage) drinking rituals, wine is increasingly finding a place in Chinese culture. At the moment they are ranked 5th in the global wine consumption list displacing the UK from the top 5 in 2012. This article will argue that the Chinese wine market has huge potential, by elaborating on the development of the Chinese wine industry. Furthermore, the industry will be placed in a global context, and predictions will be made for the future.
It can be argued that the wine’s business increase is remarkable given the country’s short history of mass wine consumption. In the beginning of the eighties, Rémy Martin set up the first joint-ventured in Tianjin, only 100 miles away from Beijing. Due to the lack of purchasing power of the domestic population, most of the wine was exported to the West. Twenty years later, when the Chinese economy was growing drastically, it became interesting for the company to start selling to the domestic market too.
In addition, the Xinjiang region has an extensive history when it comes to viniculture. In the 4th century BC Greek settlers introduced wine and advanced irrigation systems in this region. Even Marco Polo mentioned the good quality of the local wines. Other noteworthy wine producing regions are Yantai, Hebei, Sichuan, Jilin, Shanxi and Ningxia. With 140 wineries and being responsible for 40% of the country’s total, Yantai-Penglai is the largest wine producer of all.
In 2005, 90% of grape wine produced was consumed locally. Today, national companies such as China Great Wall Wine Co. Ltd, Suntime and Changyu play a big role in the domestic market. The latter is the oldest and the biggest in the country. Other findings show that the global market for imported wines is growing twice as fast as for national wine. The same situation is applicable to China, where the French wines are extremely popular. Recently, they have become Bordeaux’s largest export destination.
From 2006 to 2010 the volumes of imported wine grew 7.83% to reach 639 million cases. Sales in 2011 were estimated to be 1.6 billion bottles which provided them with a 7th place in the world ranking. The US and France are leading the list with respectively 4.0 and 3.9 million bottles. According to the figures the rise will be 54.25% in total in the ensuing five years. In August 2012 Waitrose became UK’s first retailer to import Chinese wine. The Changyu Cabernet Gernischt (2011) was described as spicy, aromatic and juicy red andwas retailed at £9.99.
Figures show that Chinese consumers should be drinking approximately 2 liters of wine per person per year by 2015. In comparison, the French and the Italians should consume 50 liters per year by then. However, despite the low average consumption per capita, the number of inhabitants favors the Chinese position on the market. In ‘The Future of Wine’ merchant Berry Brothers and Rudd state that China’s wineries will rise at least 10-fold, with a quarter of them producing fine wine quality. Thanks to changing climate conditions they could even rival the best of Bordeaux’s. In Pro-Wine Training & Consultancy’s blind test held in 2011 Ningxia beat the Bordeaux wines, although there was a heavy discussion afterwards. However, it emphasizes China’s fast development of quality wine.
All in all, it is clear that the Chinese wine industry is booming. This statement can be underlined by the quote of Waitrose wine buyer Katie Mollet: “We’re bringing in a new era of lesser known wines being sold in the UK as the interest in China, and more specifically the Chinese wine industry, continues to grow.”