Although the total volume of still wine consumed in China dropped by 2% in 2017, the volume of imported wine grew by 15% on the previous year, according to figures from the IWSR.
A key factor in the increase in imports is the success of Australian wines in China. In the 12-month period to March 2018, Australian imports soared by 51% to AU$1bn (US $777m), boosted by the China-Australia Free Trade Agreement (which came into effect in December 2015) and the increased awareness of Australian wines.
Meanwhile, the Chinese retail landscape is showing a continuing shift towards online wine purchasing, helping increase visibility of international wines.
Growth in imports
Five years ago, domestic wine accounted for around 75% of the market with imports taking a 25% share. By 2017, however, this had shifted considerably with domestic wines now taking a 61% share of the market and imported wine rising to 39%.
The largest volume of imported wine comes from France, which counts for a 15% share of the total wine market.
While Australian volumes are currently only half of that of France, taking an 8% share of the market, Wine Intelligence highlights the growth potential of these wines.
“Australian wine has the second highest awareness and consumption levels after France, with 53% of urban upper-middle class imported wine drinkers in China aware of Australia as a wine-producing country while 36% have drunk wine from Australia in the past six months,” according to Wine Intelligence in its China Landscapes 2018 report.
Chile, Spain and Italy complete the table of the five top imported wines.
“One might think the most successful imported wine brands in China are predominantly from Bordeaux,” said Wine Intelligence research director Chuan Zhou.
“That might have been true five years ago, when imported wine was primarily associated with gifting and business occasions, but as the market is shifting towards personal consumption more imported brands from Australia, Chile and other major producing countries are building their presence in China and connecting with their audiences.”
China: the top destination for Aussie wines
China overtook the US to become Australia’s top market for wine exports (by value) in 2016: a position it maintained in 2017 with the value of the category up 63%, according to figures from Wine Australia.
The China-Australia Free Trade Agreement, which cut import duties, is credited as a key factor for growth, along with a growing Chinese middle class with an increased interest in wine.
“The implementation of the China–Australia Free Trade Agreement in 2015 provided impetus to an already strong market,” says Wine Australia. “The export figures for 2017 suggest Australia is well-placed for this trend to continue.”
Wine Intelligence conducts research in 32 markets and, of these, China is the only country that has seen such impressive performance of online retailers in wine purchases.
Although the proportion of consumers who shop for wine online (48%) has not increased in the past year, the declining use of bricks-and-mortar channels such as hypermarkets and department stores show e-commerce is continuing to gather momentum.
China's most powerful wine brands
- Great Wall
- Yellow Tail
Wine Intelligence has used a combination of consumer reported band health measures – such as awareness and purchase index – to determine brand power
The retailer usage confirms this trend with JD.COM (42%) surpassing Walmart (35%) to become the retailer with the highest proportion of wine drinkers to purchase wine from for the first time in the Chinese market. Its rival, Alibaba’s Tmall (33%), ranks third.
Meanwhile, online retailers are increasingly focusing on premium and fine wines.
“The online channel has historically been associated with lower priced, value wines, leading to aggressive pricing strategies," added Wine Intelligence.
"Due to the increase competition for entry-level wines, larger e-commerce platforms such as JD and Tmall are moving towards premium and fine wines to increase profit margin and seek differentiation."
Online purchasing also allows consumers to access wines that may be unavailable or prohibitively expensive in China.