Emerging Wine Giant China
China has become the 5th largest wine market in the world (following the US, France, Italy and Germany and ahead of the UK, Argentina, Spain, Australia and Portugal). Annual wine consumption in China has reached 16.8 million hectoliters, compared with 29.2 million hectoliters in the US. China is in the top 10 group of wine consuming countries.
Many people say, China is now there were America was 50 years ago. In the last 50 years, we have seen a wine revolution and boom in America and a lawyer from the Washington DC region - Robert Parker - emerging as the most influential wine critic in the world.
Jancis Robinson (2014): While in Asia last month I was asked when I thought China would produce genuinely world-class wine. I said I thought that on the basis of what I had tasted so far it would probably be within five to 10 years but added semi-facetiously, in a reference to the extraordinary speed with which the Chinese tackle their objectives, that in practice it would probably be three to six years.
Not surprisingly, there is an increasing number of annual wine fairs in China. One wine fair that is rapidly gaining importance is TopWine China in Beijing, which in 2014 took place during June 4 to 6 at the China National Convention Center, which is part of the Olympic Park.
There were 7 large foreign pavilions, with the French pavilion by far the largest. Other countries represented were: Australia, Germany, Greece, Italy, Portugal and Spain. In addition, there were about 150 Chinese booths, most of them importers.
Consumption
With less than a liter per year, the Chinese per capita consumption is dismal, but the number of consumers is huge. Thus, overall wine consumption is large. And, per capita consumption is on an upward trend. If the per capita consumption increases just by as much as – for example – the Australian per capita consumption increased between 2007 and 2001, China would become the largest wine market in the world, overtaking the US, France, Italy and Germany.
One of the main features of the China wine market, as supposed to western markets, is the predominance of red over white wine. Around 85 per cent of the wine drank in China is estimated to be red. However, as more Chinese women develop a taste for wine, white wine drinking is expected to rise relative to red wine.
The color red is considered lucky in China and is also affiliated with the Communist government, while white is associated with death and is predominantly seen at funerals.
There are two market segments. First, the lower end mass wine market. Growth in demand in this market segment --- the easy drinking, low quality cheap wine --- is expected to be high. At 0.4 liters per person a year, wine consumption is still quite low by international comparison. In France, where wine is culturally embedded, people drink 50 liters a year with consumption in Australia, another major wine producing nation, 25 liters and in the United States 15 liters. If China's per capital wine consumption was to only increase slightly because of the scale of the population it could easily shift the center of gravity of the world's wine industry.
Second, the other market segment, where China will be increasingly present is the top wines. Since 2000, expensive red wines, in particular from France, have become very popular in China among the rich and the famous. Red wine, in particular French red wine, has become a symbol of the elite and the rich. Within a decade or so, China’s rich have gone from mixing red wine with Coke to checking Parker points when ordering a wine and being ready to pay top dollars. They have become a major player in the top market segment. The recent austerity and anti-corruption drive of the Chinese President, Xi Jinping, however, has led to a marked decline in conspicuous consumption and sales of high-end wine.
The fact that expensive, red wine are more a status symbol and that they are often not consumed privately at home with friends but in public with business partners or given as present, has led to an increased price differentiation of wines depending on the condition of the label in the international market. Bottles with labels that do not meet the highest aspirations and cannot be used as a present for a business partner are suffering a steep discount at auctions or are not sold at all.
See:
Germany at TopWine China 2014 in Beijing, China
Production
China has emerged as the fifth biggest wine producer in the world, mainly for domestic consumption, although Chinese wine has started to appear on the shelves of other countries. Wine producer China, where traces of wild wine dating from the second and first millennium BC have been found, is clearly on the fast track. China has a long tradition of producing all kinds of wine, but produced practically no vinifera wine before the economic reforms of the early 1980s.
Jancis Robinson: China undoubtedly has a present and burgeoning future as a wine producer and consumer, but all Chinese wine regions assayed so far have one major disadvantage. They are either, like Shandong on the east coast, so wet in summer that it is a struggle to harvest fully ripe, healthy grapes, or they are so cold in winter, like Ningxia, where Moët Hennessy recently established a sparkling-wine operation, that the vines have to be laboriously buried every autumn to protect them from freezing to death. Quite apart from the damage it can do to vines, the continuing urbanization of China suggests that eventually this may become rather expensive.
Much of the wine industry is run by the Chinese Government. The wine industry is dominated by three giants. Great Wall, Changyu and Dynasty Estates are the big players of China’s burgeoning wine industry.
China’s first winery, the Changyu winery, was established in 1892. It won gold medals in the 1915 World Expo for their Roses and Rieslings. Its cellar is the largest wine cellar in Asia. Changyu puts out a million and a half bottles of wine annually. Dynasty Estates is a joint venture of the state and the French company Remy Cointreau.
Chateau Lafite Rothschild, partnering with CITIC, China's largest state-owned investment company, is in the process of setting up a winery in China to produce grand cru wines there. The French wine maker plans to plant on 60 acres in the Shandong province. Chateau Lafite has an extraordinary reputation in China - so much so that the property's second wine, Carruades de Lafite, commands the same price as other first growths.
Apart from the large wineries, the Chinese wine industry is also littered with smaller, privately owned wineries.
Imports
China's import wine market is dominated by the French. Over 50 percent of imported wine comes from France. Labels like Chateau Lafite Rothschild have a cult status among the country's nouveau-riche.
German wines are much less glamorous. Generally, Chinese people do not think of wine when it comes to Germany's finer exports. They think of cars, machines and possibly beer. German winemakers and the German Wine Institute are in the process of changing this. German wine exports to China have increased dramatically in recent years, although from a low base. It is expected that China will soon become the largest wine market in Asia for German wine exports, ahead of Japan.
See:
A Morning at Château Canon La Gaffeliere in Saint Emilion with Owner Count Stefan von Neipperg, Bordeaux
The Wine Empire of the von Neipperg Family in France, Bulgaria and Germany
Exports
Most of the wine is produced for the local market. China still has a low profile outside of Asia, but many are watching to see if this industry becomes a global player. Experts predict that China could become the next Chile within a decade – a destination for affordable and quality wine production.
Top Wine China 2015
Top Wine China 2015 is coming up in 12 months.
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