Nation’s new appetite has grabbed the attention of global producers and is almost certain to determine the world market’s future
The impact of increasingly prosperous Chinese consumers on world commodity markets is, on one level, a matter of arithmetic.
Take wine. Per capita annual consumption of the grape-based tipple in China is a sober one and a half liters. This compares with a hangover-inducing 50 liters a year for the average French person.
However, with 20 times the population of France, China’s wine drinkers have a much greater influence on the world wine market than the per capita numbers might suggest.
In fact, the growth of the Chinese middle class and an increasing appetite for wine pushed China into fifth place as a global consumer in the latest figures from the International Organization of Vine and Wine.
The intergovernmental body said domestic demand in China was the biggest factor contributing to growth in global wine trade volumes in 2017. A separate business survey suggested Chinese consumption, driven by online sales, could leap to the No 2 spot by 2020.
China also took seventh place as a global producer, reflecting the activity of domestic winemakers, although homegrown wine has not lately been matching the pace of imports.
Growing Chinese consumption is a bonanza for producers. Fifteen percent of the country’s wine imports come from France, which is ahead of Chile, Spain and Italy.
But Australia is not far behind, particularly since the China-Australia free trade agreement came into force in 2015. The value of Australian wine sales to China in the 12 months to June this year were up more than 50 percent.
Overall, China’s newfound thirst for imported wine has been a boon for European producers that saw sales under pressure after the financial crisis.
It has also, however, brought new challenges to the international wine market which, like any other consumer sector, is subject to changing tastes, legislation and tariffs.
Wine exporters initially focused on selling China luxury brands, traditionally offered on social and official occasions. The Chinese government’s efforts to crack down on such lavish gift-giving has, however, reduced that market in the past five years or so, and sellers have switched to targetting the ordinary consumer with lower-value brands.
Exporters also have to bear in mind Chinese tastes, which include an overwhelming preference for red over white wine and sweet over dry. The challenge, then, is whether to try to change the tastes of Chinese consumers or to focus on varieties that they are likely to prefer, or which better match the flavors of Chinese cuisine.
Wine expert Li Demei, who told a recent wine event in Shanghai that Chinese drinkers favored a touch of sweetness, offered the results of his consumer survey to guide exporters to the Chinese market.
The taste dilemma has sparked a debate among Old World traditionalists. The French have even staged a debate on “France-China: do we share the same taste?”, at which one French participant sniffly questioned whether China really had a wine culture. Another claimed to have met many in the Chinese wine trade who had no idea about what they were selling.
One factor that might determine the evolution of the market is the growing role of Chinese wine experts and entrepreneurs outside the country’s borders, with investments as far afield as Bordeaux and the Napa Valley. But again, traditionalists have reacted badly to Chinese owners ditching the existing names of some ancient vineyards in favor of those more acceptable in their home market.
In one way or another, Chinese demand is almost certain to determine the future of world wine, just as it has influenced other markets.
Such outside influence in the wine sector is hardly a novelty. Once upon a time, the English predilection for fortified wines popularized the consumption of port, Madeira and malmsey. Many of the fortified wines from the vineyards of Portugal still bear the names of their British founders.
Traditionalists should perhaps not be nervous but instead raise a glass to China’s positive impact on the wine trade.
The author is a senior media consultant for China Daily. Contact the writer at [email protected]
(China Daily European Weekly 11/23/2018 page11)