The wine market in China is enormous. How enormous? Wine currently only accounts for less than 2 percent of beverage consumption in the country. You can definitely look on the negative side and say that the reason for such a low percentage is because there isn’t a demand. However, Changyu Pioneer Wine Company, home of Chateau Changyu and a leading domestic wine producer, said net profits rose by 43 percent during the third quarter of 2009. Some but not all of these profits come from the U.S., Canada, and other foreign countries as critics have treated Chinese wines with the same disregard with which Chilean and Australian wines were once treated. Therefore, the other profits must stem from domestic consumers. Thinking positively, Changyu Pioneer plans to massively expand their grape plantations by the end of 2010 as the market continues to grow.
What chance do Chinese wines have against imported wines locally?
First of all, red wine has become a symbol of the elite and rich in China. Generally speaking, the elite and rich tend to purchase imported products when it comes to luxury. When the Chinese think high-end fashion they think Louis Vutton, Gucci, Chanel, Burberry, Prada, and the like. When the Chinese think high-end wine, do they think Chinese wine? Probably not. China, just like almost everyone else, believes French wine is the pinnacle of the grape vine. After all, the French have been making wine since the 6th century BC. That’s a lot of experience. On top of that, the air in China isn’t particularly known for its quality of cleanliness. Even though profits from wine are up domestically and in 2008, wine merchant Berry Brothers and Rudd predicted that within 50 years the quality of Chinese wine will rival that of Bordeaux, France, I think putting pressure on imported wines is going to be a tough challenge for China.
What do local Chinese winemakers have going for themselves?
Market Immaturity
French wine didn’t become popular in China until the year 2000 when the country experienced an economic boom, providing local consumers with disposable income to spend on luxury goods like wine. Local Chinese winemakers can capitalize on this opportunity by grabbing market share through wine newcomers.
Patriotism
China’s modern wine history actually dates back more than a hundred years ago. It is believed that Confucius drank the wines of Shandong Province, the home of Changyu Pioneer. Changyu is also believed to be the tenth largest winery in the world. It’s no doubt that the Chinese like to purchase foreign luxury brands as a sign of status but just like any other country there are many locals that still support their country by purchasing domestically. As China continues to grow economically, a rise in self-confidence of its own products is inevitable.
Consumer Understanding
Changyu understands that wine in China is currently about fashion. How a bottle of wine and its packaging looks is key to the consumers as many of them purchase wine as a gift.
Questions:
Do you think China will have commanding control of the local wine market in the next 10 years? Why or why not?
Comments anyone?
Whether you agree or disagree, we’d love to know what you think. Leave your opinion, thoughts, and/or comments below. Useful links to resources providing additional insight are especially appreciated. Thanks. =)
Useful Links:
Selling Wine in China: Interview – John Gai of Palette Wines
Hi All,
I found some great information on BBC News by Sylvia Smith about foreign wines in China.
According to Les Celliers de Meknes’s Belgian export manager, last year the company saw real growth, especially from new markets.
“Our production grew by over 12% and our biggest emerging markets are India and China,” says Jean Pierre Dehut.
“This is likely to deprive European producers of some of their anticipated growth in these areas.”
He also predicts that the extra hectares being planted with vine seedlings will be eclipsed by the speed of growth in the market.
“Unfortunately we no longer have any indigenous Moroccan varieties,” he explains.
“We use grape varieties from the Mediterranean basin.”
Wine has been produced in Morocco for thousands of years, so it does not touch the raw nerve it would in Saudi Arabia, for example.
It is sold in a separate section of the country’s largest supermarket chain, with specific cash tills dedicated to all transactions involving alcohol.
The first evidence of wine production in Morocco was in the time of the Phoenicians – the first millennium BC.
Prized by the Romans, the strong wine was sent back to Italy.
During the years of the protectorate in the early 20th Century, the French colonised the Meknes region in the foothills of the Atlas Mountains, planting hundreds of kilometres of vines to satisfy the need of compatriots living in the North African country, but also for consumption in France.
Until the Treaty of Rome in 1957 banned blending wines, the highly coloured, robust Moroccan wine was shipped back to France in bulk and frequently added as a boost to Gallic wine.
After Morocco gained its independence, King Hassan II offered parcels of land in the 1960s at knock-down prices to foreigners so they would continue wine production.
Chinese Bottling Factory
Some French took up the offer at the time and others are now purchasing vineyards taking advantage of low land prices, manpower and transport costs.
But in return buyers have to comply with a “Cahier de Charges”, a list of responsibilities that include employing a certain number of local people.
Wine-growing, categorised along with other agricultural products, is tax-free until 2012, providing the farming is not on an industrial scale.
Members of ASPRAM, the Moroccan wine-growers association, buy a percentage of their grapes from local growers so as to remain within the scope of the law.
Mehdi Bouchaara, a member of ASPRAM and director of Les Celliers de Meknes, says that Morocco is currently producing 300,000 hectolitres of wine each year, making it one of the most significant in the Arab world.
“At the moment we are in negotiations in China and will shortly be building a bottling factory there. Most of our wine is exported in bulk,” he explains.
“With our Chinese partners we will put it in bottles that bear a Moroccan label.”
Currently only about 1,000 hectolitres are exported, but with a foothold in China, there is a chance that the record of almost 300m hectolitres clocked up during the French protectorate could be matched or even bettered.
Read the whole article and watch the video here (http://news.bbc.co.uk/2/hi/africa/8352885.stm).
Here is Celliers de Meknes’s website (http://www.lescelliersdemeknes.net/en/?Include=About%20us).
Enjoy,
Edward Eng
Biggest False Wine Brewing Network Cracked down in Hubei Province
http://english.cri.cn/6909/2010/02/23/1361s551896.htm
Ouch! That’s gotta suck.