China thumbnail - China grows up: part two

Two weeks ago, we explored four key trends in China’s maturing market. Today, we talk about four more, covering youth, sparkling, whites, and closures.

Part one of China grows up showed a seismic shift in the way wine is sold and consumed in the Chinese market. Higher disposable income and improved distribution logistics for wine is driving growth in lower tier cities; wine is increasingly purchased for personal, everyday consumption; retail prices are normalising and regional tastes are shaping local wine ranges.

Part two shows how a younger and diversifying population is creating opportunities for aromatic white wines, sparkling wines and screw-cap closures in a market traditionally dominated by Old World reds under cork.

  • A younger and diversifying wine drinker population
    Younger Chinese consumers are having a profound impact on the wine category. Research suggests that international-minded, younger drinkers, with more exposure to wine drinking culture through their overseas travels, are spearheading this growth. Those between the age of 18 and 29 now account for 37% of the urban upper-middle class drinkers of imported wine, making it the biggest age group.

    Through our research, Wine Intelligence has identified six distinct groups of drinkers of imported wine in China, each displaying a distinct set of behaviours and relationship with wine. We have noted the decline of “Prestige-seeking Traditionalists”, conservative, high-spending consumers who choose imported wine because of the associated prestige and social status. They now account for just 16% of the population of imported wine drinkers in China, 32% of volume and 36% of value, compared to 19%, 37% and 43% in 2015 respectively.

China drinking population - China grows up: part two

  • Strong potential for aromatic whites…
    Though white wines have always struggled against the popularity of red wine, the market is changing. In 2015, 51% of imported wine drinkers consumed white wine. Today that number is 56%. Moscato has been singled out by trade experts as having strong potential; aromatic whites with pronounced fruity and floral aromas “are very appealing in China” according to one importer.

    Another retailer found that “customers are very happy with the white wine matching suggestions we give them, they are very successful here in Southern China”. This is an allusion to the food matching potential of aromatic whites with the seafood and lighter dishes typically found in the East and South of China.

  • …and for sparkling wines
    Consumers beguiled by aromatic and sweet whites are also catching on to the opportunities that sparkling wine offer them. While Champagne dominates the limited sparkling wine category at present, sweeter styles such as sparkling Moscato, Asti and Prosecco are gaining popularity. An importer struck cut to the heart of the matter: “Prosecco is very successful in meeting Chinese consumers’ requirements – good value and well-balanced for the Chinese palate.”

    While flavour compatibility – sweet, soft fruit and aromatic characteristics appeal to the Chinese palate – is important, the wider context of social image plays a role too. These sparkling wines are considered affordable, are often perceived as a ‘treat’, and can inspire ‘shareable’ moments on social media (particularly via photos via WeChat). The value they represent is more than just monetary, particularly for the image-conscious younger generation.

  • Increasing acceptance of screw-cap closures
    While Chinese consumers have previously been reluctant to accept screw-cap closures, our research demonstrates that they will forgive a wine for its screw-cap closure if it’s purchased for informal occasions at home (while relaxing or having an informal meal). For more formal occasions, such as gifting or celebrating Chinese New Year, there is still resistance towards screw-cap.

China closure pricing - China grows up: part two

For more insight into the Chinese wine market, our report China Landscapes 2017 is available for purchase now. Featuring detailed consumer profiles, wine motivations, channel and retailer usage, consumption behaviour, beverage repertoire, brand health and hot topics on wine style and flavour descriptors and closure attitudes, China Landscapes 2017 is essential reading.

Author: James Wainscott