The Chinese market flatlines

A new report from Wine Intelligence confirms that wine sales in China have fallen. There are, however, some market bright spots.

Shanghai/Photo by Li Yang on Unsplash
Shanghai/Photo by Li Yang on Unsplash

This year was never going to be a good one for wine in China. In late 2019, long before the Covid-19 pandemic was even a cloud on the horizon, industry observers like Ian Ford of Nimbility were noting that the market had stopped growing and was due to flatline for at least another 12 months. The slowdown in the Chinese economy caused by the trade war with the US had led to full warehouses and pipelines that would take a long time to clear, even if relations between the two countries improved. 

That gloomy prognosis has been confirmed by the latest Wine Intelligence China Landscapes report which records a drop in total 2019 sales of 15%; from 144.5m cases to 122.3m. Strikingly, the impact was heavier on domestic wine which suffered a 20% reduction than on imports where the fall was 11%. 

The report quotes trade experts’ expectations of a further decline in 2020 for reasons including the direct effects of Covid-19 and the association reduction in social activities such as group gatherings, not to mention an economic recession, a fall in wine imports and drinkers shifting to beer and spirits. 

However, a number of positive factors have been pinpointed in the report. Online tastings may increase at-home consumption of more interesting and premium wines – a trend that will be helped by the finding that “over half of the Chinese wine drinking population enjoy trying new types of wine on a regular basis, presenting an opportunity for niche wine types to gain traction”.

Unsurprisingly, online buying – already a strong sector in China – has continued to grow over the last six months, at the expense of specialist wine shops and stores focused on imported food and drink. Inevitably the winners from this trend are the local giants JD.Com and Tmall, both of which are “experiencing significant increases in usage in the long-and short-term.”

Despite the reduction in domestic wine sales, the two most powerful brands in the Wine Intelligence Brand Power Index are still Changyu and Great Wall, followed closely by DBR Lafite. Fourth on the list comes Yellow Tail which “is the only brand to experience significant increases across all brand health measures, reconfirming its popularity in the Chinese wine market.” Australia’s Treasury Wine Estates takes the next two places with Penfolds and Rawson’s Retreat while the remainder of the top ten, in order of success, includes Torres, Gallo’s Carlo Rossi, Casillero del Diablo and Jacob’s Creek.

White wine is not enjoying the growth in acceptance many have hoped for, with slightly fewer consumers saying they’ve drunk Riesling or Chardonnay over the last six months than over the same period in 2015. The figure for Sauvignon Blanc remaining unchanged. Champagne consumption also appears to have shrunk. Merlot and Cabernet are less popular than previously, though Pinot Noir consumption seems to be rising, with 22% saying they’ve consumed it.

Of concern to the industry as a whole will be a drop to 78% from 82% of Vinitrac respondents who’ve drunk red wine over the last 12 months, but strikingly the figures for beer and Baijiu have both fallen even further.

The report authors predict a growing market for “more mainstream” priced products – at over RMB300 and for well-known brands and those like Yellow Tail, with “attractive visual packaging”.  Niche categories such as organic wine are also “making ground in big cities like Beijing”.

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