Growth in China’s Wine Market

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CHINA’S wine market is emerging from its recent state of flux, bolstering wine markets that had banked on its growth.

According to a new Rabobank report, businesses that were increasingly invested in “what is now one of the world’s largest wine import markets”, will see some upswing.

The report — launched last week at international wine conference Wine Vision in Sonoma, California — said the Chinese wine market had shifted away from the business and government entertainment sector toward younger retail consumers.

Rabobank senior analyst Marc Soccio said the evolution of the Chinese consumer base was central to its recent turnaround in demand for imported wine.

“With much of the market previously centred around business and government entertainment, we’ve recently seen a significant shift in the way wine is distributed, purchased and consumed in China,” Mr Soccio said.

“There is now a shift towards a younger retail consumer who is looking to engage more intently with the wine category, displaying a thirst for foreign wine culture and education.

“They are also much more willing to purchase wine for their own personal and social consumption, rather than as a gift, as older generation have done.”

The report revealed the rise of e-commerce, fuelled by highly connected shoppers, had been

impressive, as shown in the results of online sales and distribution portal Alibaba’s results from its “Single’s Day” promotion in November.

The marketing day saw sales across all consumer categories hit $US17.8 billion ($23.7 billion), up from $US14.3 billion ($19 billion) last year and $US9.3 billion ($12.4 billion) in 2014.

“While Alibaba is a well-known site, it is just one of myriad sites currently vying for the Chinese consumer dollar, providing new opportunities for wine businesses,” Mr Soccio said.

“The average age of subscribers to Alibaba’s business to consumer sales platform, Tmall, is just 27 — making this an important platform to engage with younger consumers.

“This is just one example of a platform that has been hugely effective at directly connecting wine companies and wholesalers with budding consumers.”

Mr Soccio said on top of providing a “growing route to market”, these sites were also acting as important tools for wine companies to set and signal market prices.

While eCommerce was ultimately acting to deliver better pricing and convenience to consumers, Mr Soccio warned managing these platforms was an evolving science that could be challenging for wine companies to navigate.

According to the report, the recent changes in the market provided more confidence that growth in the Chinese wine market was being built on stronger foundations.Demand appears to be well-supported by the way in which younger and increasingly affluent Chinese consumers are gravitating to wine and wine culture, which is particularly benefiting foreign brands in the market.

Experts of WABA believe that Chinese wine market will show a resumption of growth, and maintain the momentum of rapid growth. There are some reasons for it, on one hand, there are more and more middle class love wine; on the other hand, wine in Chinese has been insufficient. In addition, a new generation of wine enthusiasts will spring up in the next few years. There will be 37 million Chinese to reach the legal drinking age in the next five years, which means that the potential consumers will increase by 37 million. That is undoubtedly a good news for big Wine production country. In 2013, China has imported 4 million 100 thousand wine from Australia, and ranked second. More and more Chinese love to drink wine in recent years. To 2015, wine consumption has reached 1 billion 600 million liters in China and China’s wine consumption shows a vigorous development trend during the period from 2016 to 2018.