Following China’s prestige-dominated first wine age, the 2010s were characterised by a growing culture of wine as both an everyday drink and as a gift at the major festivals. With Covid curtailing socialising including family events, consumer relationships with wine may have changed for the long-term.
What has happened in the Chinese wine market in the past year? At first glance, indicators seem to be pointing in opposite directions.
The volume of wine consumed in 2020 was dramatically lower than in previous years, as China locked down to combat the Covid-19 virus, with social interactions curtailed and traditional gifting events, such as Chinese New Year, were in effect cancelled. Wine volumes were down almost 20% in China 2019-2020, with the volume of imported wine seeing a decrease of more than 30%, according to IWSR data.
And yet, the underlying recalled behaviour of imported (as well as domestic) wine drinkers in China – a population totaling over 50 million people – showed relatively little change in 2021 versus previous years, according to the consumer usage and attitude data collected by Wine Intelligence. Recalled consumption of wine in the on-premise fell, predictably, in 2020, but has bounced back in 2021.
So, how can wine in China be showing a dramatic drop in the the volume of wine consumed, whilst at the same time, there is no recalled shift in how often consumers are drinking wine? This sudden and dramatic divergence in metrics that had previously aligned, and are based on rigorous and consistent methods, suggest that we are observing another watershed moment in consumer behaviour in the Chinese wine market, akin to the fall in prestige wine usage after 2013, and the rise of the Millennial-led ‘regular’ wine drinker from 2015 onwards.
In reality, China’s wine market has always in effect been two markets, with a small overlap. One is the regular, habitual wine consumer, whose buying pattern reflects a variety of in-home and out-of-home wine occasions. “This archetype is typically urban, educated, affluent and international in their outlook, and their behaviour has clear similarities with consumers in developed wine markets – wine drinking is at least a monthly, if not weekly occurrence,” remarks Richard Halstead, COO Wine Intelligence.
Out of the more than 50 million semi-annual imported wine drinkers, Wine Intelligence estimates that over 55% of this cohort drink imported wine at least once a month. This monthly drinking population accounts for approximately 6.5% of the urban population aged 18-54, and just 2.5% of all Chinese adults. To put this in context, China’s monthly wine drinkers are roughly equivalent in size to the monthly wine drinking population of the UK, or a third of the same population in the US.
The second ‘market’ for wine in China is much larger – and whose behaviour and attitudes are far less easy to measure and much more susceptible to the winds of fashion, politics, and circumstance. This is the proportion of Chinese adults who buy wine as a gift, or for a particular social occasion, typically once or twice a year. These occasions tend to coincide with the major events of the Chinese calendar – Chinese New Year, Mid-Autumn Festival, and the increasingly popular Singles Day on 11 November, when single people are celebrated and bought gifts for, mainly online. The wine category experiences a huge surge in buying at these times from people who then don’t normally participate in the wine category for at least another year – or possibly never return to the category at all.
The major change in volume in 2020 appears to be coming from this vast cohort of occasional wine buyers. This makes sense when one considers the massive disruption to event-based socialising in China caused by the pandemic, and the equally large “bullwhip” effect of a very large population doing something slightly different for a period of time.
What does this mean for wine producers? Barring a major change in government policy towards alcohol, the wine market will remain at similar, lower volume levels compared with the peak of the market in the mid-2010s. With more knowledgeable and regular consumers driving volumes, there will be even less room for low quality products and blatant counterfeit wines, both of which are already on the decline thanks to the shift in wine purchasing to e-commerce, where negative reviews can kill reputations. More positively, there will be more room for less established styles, origins and regions, as regular consumers start to expand their repertoires, and particularly higher quality domestic wines that are starting to appear on shelves and on restaurant wine lists.
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