One of the fundamental truths about wine consumer behaviour is that, in general, the characteristics of a given geographical market reflect the unique combination of cultural, political, economic, and social factors that have been at work for years, if not generations. The wine markets in Hong Kong and mainland China have very different histories and behaviours, to the extent that a direct comparison of a Tier 1 Chinese city, for example Shanghai, with Hong Kong, shows differences at every level – what wine is bought, where from, how often, and for what purpose.
That said, recent Wine Intelligence consumer data in Hong Kong and mainland China is showing how the Covid pandemic is drawing together certain market trends in these two markets, while at the same time exaggerating certain other differences. While both have experienced overall lower rates of wine consumption, Hong Kong has seen key consumers spending more – and willing to pay more per bottle for wine – in the off-trade.
China’s wine consumer behaviour in 2020 was marked by a slide in wine drinking in the on-premise, as well as a sharp drop in occasional wine purchasing for gifting – a traditional wine buying occasion which has been in decline for a number of years already. But during the year, as lockdowns eased, regular Chinese wine consumers started to flow back to the on-premise, with wine consumers stating that they are now spending more on wine than before in smaller restaurants and bars that have good atmosphere, away from crowds. Wine with informal meals in particular shows growth, though worries about safety have held back larger social gatherings, so overall footfall in bars and restaurants has not yet recovered to pre-pandemic levels.
Hong Kong, however, saw its main drivers of wine drinking – the educated middle and upper middle classes – transfer their spending to the off-trade as the pandemic removed opportunities for travel and dining out. At the same time, they are spending relatively more money on what they drink at home, a shift not seen in the China consumer market yet.
Premiumisation in the Hong Kong off-trade market
Wine Intelligence consumer research shows that Hong Kong buyers’ spend on wine for home consumption increased during the Covid-19 period, driven by millennials and wealthier consumers unable to visit restaurants and go on holiday. This appears to have been unaffected by a 6% fall in GDP from 2019 to 2020. The amount spent on wine in the off-trade in Hong Kong has increased since 2015, with the wealthiest group in this market now making up 28% of regular drinkers (measured as at least semi-annual wine consumption) compared to 21% six years earlier.
Wine consumption for gifts and BYO has risen sharply in the past year, as restrictions have eased; spending for formal meals at home has dipped slightly and remained stable for informal meals at home and drinks at the end of the day.
“68% of millennial semi-annual wine drinkers in Hong Kong believe it’s often worth spending more to get a better wine,” says Richard Halstead, COO Insights & Custom Analytics at Wine Intelligence. “The frequency of wine consumption has remained constant, suggesting that consumers want to drink wine at the same rate, but they are willing to spend more per bottle and trade up.”
Two types of wine drinkers in China
Wine Intelligence research shows that mainland China has two distinct markets: the knowledgeable regular wine consumer, whose habits have remained stable, and the occasional (often once-a-year) wine buyer whose purchases are mainly to offer as gifts, making them a group that is harder to measure.
The distinction between the two groups of drinkers is crucial because, whilst wine volumes are likely to remain lower for some time, the consumers driving the market are relatively knowledgeable. These are regular, habitual wine consumers, whose buying patterns reflect 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 very developed wine markets – wine drinking is at least a monthly, if not weekly, habit.
This group comprises some 6.5% of the urban population aged 18-54 in China, or around 28 million drinkers calculated from Wine Intelligence insight. They are now drinking more domestic wine than previously, driven in part by the improving quality of local offerings, and reflecting a global, pandemic-inspired, trend towards buying local food and drink where possible, as seen in all key consumption markets.
Older consumers in China’s regular wine drinkers’ market are showing a simultaneous increase in confidence when buying wine, and yet a falling wine knowledge level, with them showing less familiarity with world wine regions and grape varieties than these types of drinkers had done previously.
“Part of the impact of Covid in China has been a sharp drop in tasting events and fewer in-person wine classes. This may explain the more conservative consumer attitude of buying wines they already know, with greater confidence in their ability to determine a wine’s quality and authenticity, and with a sense that they don’t need to experiment with less familiar products,” says Richard Halstead.
Silver lining: Australian wines in Hong Kong
Australian wines have benefited from an increase in the seeking out of wines from a broader base of origins. According to Halstead, “One of the main factors in Australian wine’s success has been the perceived level of trust Hongkongers placed on it during the pandemic. French wine also saw similar rises in consumer trust levels.”
Wine Intelligence data shows that among regular wine consumers in Hong Kong, preferences for French, Italian, Spanish and Chilean wine are also on the rise. Wealthier wine consumers mostly tend to engage with French and Italian wines and do not appear to be seeking out more niche products. They have additionally further developed a taste for Sauvignon Blanc and Chardonnay, presenting an opportunity for wine of these varietals to be positioned at more premium price points, as they are willing to spend more to get a better-quality wine.