Growing consumer demand for wine in China in 2021- Wine Intelligence

After a 32% drop in the value of wine sold in China in 2020, the market is expected to return to 2019 levels as Chinese consumers’ wine engagement increases

Exactly one year ago on March 3^rd 2020, Wine Intelligence reported that wine volumes in China would reduce by at least 20% during 2020 (1^st China article) that figure, as the crisis deepened, was later reviewed on a second article from May to a 30% decrease (2^nd China article).

A year on, we revisit the market in China with Juan Park, Wine Intelligence Director speaking Alberto Fernandez, General Manager of Asia-Pacific, Middle-East & Africa for Familia Torres and Fongyee Walker MW of Dragon Phoenix Wine Consulting and the first Master of Wine based in Mainland China to provide us with an update.

What was the impact of Covid-19 on the Chinese market in 2020?

Alberto Fernandez (AF): When we spoke last year we discussed that the wine market in 2020 would drop by 30% in value. I have to say that the prediction was pretty accurate as the final drop was very close at 32%. We’re still suffering some of the effects of the crisis as international visitors are still not allowed to visit the market, but the situation is very different now than it was back in May last year.

Fongyee Walker MW (FW): The biggest difference is that Chinese consumers don´t tend to drink wine at home as much. This means that the at-home occasion couldn’t compensate for the overall drop of wine sales as it did in other markets such as the US and the UK. But it was not a bad year for all wine related businesses in China, as many operators were able to keep their business up and running during the lockdowns, relying mainly on direct relationships with consumers and specialised offerings.

What is the current situation of the market?

(AF): The Chinese market now feels completely back to normal. There are some instances where a few Covid-19 cases have been identified locally, but overall wine fairs are back to normal and restaurants are buzzing. The lack of international visitors has a smaller impact for us as it represents only a small share of business here. In fact, this has been compensated for by wealthy Chinese consumers spending their money locally instead of in Tokyo or Paris, for example. Luxury brands are also performing well in China this year too due to this increased spend by Chinese consumers within the country, coupled with a reduction in counterfeits and smuggling. Chinese consumers are back to consuming wine in restaurants and enjoying their celebrations.

(FW): Restaurants are packed even during the week as consumers feel liberated and are out socialising. A positive impact of the crisis is that Chinese consumers seem to be more focused on their lifestyle choices now. I see a lot of young consumers that are now signing up for wine courses as they have realised what is important to them. We also see that cooking at home is becoming much more important, and Millennials are now interested in good wine and food. It is true that wealthy consumers are now spending locally, and Hainan island has become a hot destination for tax free shopping.

How will the Chinese wine market develop?

(AF): Overall I predict that the 2021 wine market will be similar to 2019 and it will be back to how it was before Covid-19. We expect the off-premise to become increasingly more important over the coming years in China, and communication with consumers will continue to develop. I also predict apps will continue to be important in serving regular consumers and offering exclusive wines to them. Additionally, we’ve learned that investing in good brand ambassadors is key. The Australian situation will obviously affect those in the industry, and I think that Spain, Chile or Argentina can grow, along with a comeback of Bordeaux for more expensive wines.

(FW): I see potential for Italian and Spanish wines – plus any wines that are different and interesting. During the Covid-19 crisis there were companies that were educating their clients to consume wine at home. These companies will continue to do well in the market and show everyone the way forward. When Chinese consumers can travel aboard, I believe many will be heading to wineries. In fact, I’m currently organising winery visits for 2022! The consumer is eager to continue learning and start travelling again.

Thank you to Fongyee and Alberto for sharing their views with all of us.

Author: Juan Park