Chinese consumers have developed a taste for French wines in recent years but there are threats ahead that could put the trend in jeopardy.
The Chinese wine market has boomed in recent years and shows little sign of slowing down. Statistics from the International Wine and Spirit Research (IWSR) put the size of the market at 93 million 9 litre cases in 2009 and it is estimated that the figure passed the 100 million mark in 2010.
Imported wine, which currently makes up about 10 per cent of the market, is growing especially fast. Growth has been 46 per cent CAGR over the last 10 years and 72 per cent in the past five years.
There is little doubt that the Chinese are drinking more wine, but what type of wine are they drinking?
Chinese wine preferences
According to José Luis Hermoso, senior analyst at IWSR, their preferences can be summarized in descending order of importance as: “Red wine, then French, then Bordeaux, then Chateau like label”
And as for the preferred character of the wine, Hermoso said the Chinese go for easy-to-drink fruity wines without too much of a woody taste.
So far France has been a key beneficiary of the Chinese thirst for wine.
Hermoso said: “No doubt the image of France as wine’s birth place and the sophistication of France in the Chinese consumer minds (thanks partly to other luxury brands from Cognac to cosmetics or fashion that have been present in the country for years) gives a large advantage to French wines compared to other countries.”
Rabobank confirmed that China is fast on its way to becoming a very important market for French wine. With growth of 60 per cent by volume and 100 per cent by value last year, Rabobank analyst Stephen Rannekleiv told BeverageDaily.com that China is becoming the biggest volume market for Bordeaux wine outside of Europe.
And even if it is lower value Bordeaux that usually goes to mainland China, Rannekleiv said prices are still better than those paid in Germany, which is the biggest volume market for Bordeaux.
But the dominance of the French brand is not totally assured. Fraud and low quality products threaten to upset the association of France with high quality.
“There are threats ahead: fake bottles, low quality wines shipped to China as French wines and sold at ridiculously high prices could damage the industry in the medium long term,” warned Hermoso.
Rannekleiv said many wine producing nations are using emerging markets like China as places to unload excess supply. He warned that such a strategy could be counter productive in the long run. Please click here to read another article, published today, looking at wine export pitfalls and opportunities in emerging markets.