While the topline volume numbers for China’s grape-based wine market are declining – the market recorded double digit volume losses in 2021 – Chinese consumers are becoming more knowledgeable about their wine, and are spending more on it as well. IWSR data shows still and sparkling wine values are forecast to increase at a value CAGR of between 5 and 7% in China, 2021-2026.
The market volume decline is being driven by the low-end domestic wine that still accounts for nearly 4 in every 10 litres of wine consumed in China. Imported wine losses were actually only minimal last year, despite the collapse in imported Australian wines, triggered by the punitive tariffs introduced in March 2021. All the major wine producing countries reported big gains in sales last year. Chilean, US, South African and Argentinian wines in particular registered very strong performances.
Wine Intelligence, a division of IWSR Group, calculate that the Chinese semi-annual and monthly imported wine drinking population has jumped by around 14% since 2019. The wine-buying community in China is also showing an increasing understanding and appreciation of the wine they drink.
Among wine consumers, wine knowledge and repertoires are rising, with awareness and consumption by country, region and varietal all growing. This is being borne out in the greater numbers of Chinese wine drinkers that are seeking out quality indicators such as appellations, medals and awards, or descriptions such as reserve, when they make their purchasing decisions.
The online environment has played an important role in China’s beverage alcohol market. China has the highest proportion of online shoppers among all beverage-alcohol buyers, and the country stands out from all other markets in terms of overall ecommerce penetration and maturity of beverage alcohol ecommerce. Wine ecommerce has tapped into the curiosity of Chinese wine drinkers, enabling them to engage more with the category; the number of wine consumers who have bought wine online has now passed 50%.
This increasingly educated Chinese wine consumer is more willing to look for new experiences, and Chinese wine drinkers are buying from a broad range of brands, countries and regions of origin. They are also showing a willingness to spend more on their wine, and recalled spend has increased significantly across a range of locations. In both the off-trade and on-trade, the amount being spent by Chinese wine drinkers has risen sharply, on some occasions by more than 20%. IWSR data shows that premium-and-above wines have increased their share of the market from 15% in 2017 to a fifth in 2021. By 2026, it is expected that these higher-end wines will have reached nearly a quarter of the market.
Locally produced wines are also premiumising, driven by wines from the Ningxia province, which has an aspiration to be seen as the Bordeaux of China. Ningxia’s Helan Mountains region reputation is being enhanced by global awards, and this is not going unnoticed among China’s wine enthusiasts.
The scale of the potential for grape-based wine in China is demonstrated by the per capita consumption of Taiwan and Hong Kong. Wine drinkers in neighbouring Taiwan consume twice as much wine as their Chinese counterparts, while consumers in Hong Kong drink as much as 9 times more. It is not expected that these levels will be replicated even in the long term, but it does highlight that their remains plenty of opportunity in the grape-based Chinese wine market.
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