Wine in China: are you a Clinton or a Cheney?

wine in china

Wine in China: are you a Clinton or a Cheney?
Two quite different viewpoints are emerging about the future of the imported wine market in China.
On one side: those full of hope and confidence in the future, who believe that wine will take a central place in Chinese culture and consequently the Middle Kingdom will become the world’s largest wine market. Let’s call this group the “Clintons”, in honour of the former US president whose campaign theme tune was the Fleetwood Mac classic “Don’t Stop Thinking About Tomorrow”.
On the other side we have the fearful doom-mongers, who believe the imported wine market in China is headed for disaster. Their thesis: anti-corruption austerity, economic uncertainty and downright cultural incompatibility will permanently derail the wine boom. We’ll call this group the “Cheneys” in honour of the US Vice President in the Bush administration, whose dark and mistrustful worldview has been brilliantly captured by journalist Peter Baker in a new book.
This week my colleague Rui Su, China Country manager for Wine Intelligence, set out the evidence for each side of the argument at the Wine in China Conference in Hong Kong, sensibly organised by Debra Meiburg MW to act as a preview for delegates entering a hectic week of selling at the Hong Kong Wine Fair and ProWine in Shanghai.
At time of writing there is plenty of evidence to fuel both sides’ argument. The Cheneys point to faltering living standards among upper middle class professionals in the major coastal cities, who are finding more of their salary gobbled by skyrocketing rents and pricey Starbuck’s lattes, while they remain under social obligation to get the new iPhone 5 and book that holiday to Europe. The Cheneys also highlight the lack of traction wine seems to have as an actual drink to be enjoyed (as opposed to a gift that sits on the shelf), and its struggle to assimilate into a very different food and drink culture compared with the West. Their trump card is of course the chill that has settled on the luxury wine market of late, thanks in large part to President Xi Jinping’s clampdown on high profile gifting in government circles.
However the Clintons are not backing down just yet. They point to studies showing that Chinese disposable incomes will rocket in the next decade, leading to an affluent class (annual disposable income of $34,000+) of anywhere between 60 million and 150 million people, depending on whose numbers you believe, up from perhaps 20 million today. These newly affluent, relatively young and very numerous consumers will be heavily influenced by western culture and lifestyles (those European or California holidays), and they will have the technology and confidence to understand and appreciate wine.
So who’s right? Perhaps neither. Our view is that wine is here to stay in China, and we maintain our prediction of the imported wine drinking population will grow from just under 20 million today to around 70 million in 2020. As to how often this 70 million buy imported wine, this is a more open question: an average of 4 bottles a year and the market will be a shade less than it is today (cue “I told you so” from the Cheneys); a modest one bottle a month gives us a 2-3 times growth on today’s numbers; at the 40-bottle-a-year level (roughly the average for America’s wine drinkers of today) the Clintons will be looking smug. Let us know where you stand by emailing rui@wineintelligence.com with your opinions, and we’ll carry on the debate in an upcoming Network News.
Author: Richard Halstead
E-mail: richard@wineintelligence.com
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