From a global perspective, mainland China has cemented its position as one of the top wine import markets over the past five years, sitting at fourth place by 2018, behind Germany, the United Kingdom (UK) and the United States of America (USA). Only 10 years ago, China was sitting in 15th place.
Consumer preferences have changed
This growth has been the culmination of a number of factors: a booming economy, strong population growth, technology advancement and urbanisation fueling the rise of the middle class. It is this rising middle class that has seen a switch in consumer’s drinking to smaller quantities of high-quality beer and to grape wine for those aged under 40.
While local rice wine is still popular, there has been an increase in the consumption of imported grape wine. The emerging middle class has embraced western brands and perceive that they are safe and sophisticated. There has also been a move to wine being consumed outside meal occasions.
Overall wine imports have slowed
With such significant growth over recent years, it was inevitable that the percentage growth rates of wine imports would slow.
China Customs data from the Global Trade Atlas indicates that between the year ending February 2018 and year ending February 2019, the total volume of all wine imported to China declined by 15 per cent while value remained steady at A$3.8 billion. This decline in volume was consistent across sparkling, bottled and unpackaged wine. But for value, only bottled wine declined by 1 per cent, while sparkling increased by 6 per cent and unpackaged wine was up 20 per cent.
New world wines are growing
The China customs data indicates that the decline in volume has come from fewer French and Spanish wine imports, in both bottled and unpackaged. Wines from Chile and Australia, on the other hand, have experienced increases.
Australian prices are well placed for premium wine
Australian wine remains in demand in China. Australian business sentiment in China, collected in 2019, confirms that Australia’s brand reputation continues to be a competitive advantage.
According to the Global Trade Atlas, the average price per litre for Australian bottled wine grew by 8 per cent to $8.33 in the year ending February 2019. This is higher than the average price for imported bottled wine in China of $6.94 per litre and Chile’s average price of $4.99 per litre.
However, when it comes to unpackaged wine, Chile dominates with 56 per cent of its mix being unpackaged. For Australia, unpackaged wine makes up 27 per cent of the import mix.
E-commerce growing in China
Data from EXACT Data (易知数据)indicates that overall online sales grew in 2018 compared to 2017. Out of the three main platforms Jingdong or JD.com, and Alibaba’s Taobao and Tmall, only Tmall grew on last year. The volume of Tmall sales represented 37 per cent of all online wine sales in 2018 and grew by 11 per cent.
Interestingly, the Westpac Sentiment 2019 report mentioned that 70 per cent of the increase in Alibaba’s active consumers in the last quarter came from third and lower-tier cities. Further to this, information from EXACT Data indicates that Australia has done well with volume sales increasing by 62 per cent in 2018 to 7.73 million bottles, increasing its market share from 7 to 9 per cent. French and Chinese wines were the highest in terms of the volume of bottled wine sold online. While France increased by 22 per cent, Chinese wine sales were steady.
Chinese imported wine consumers are evolving
Wine Intelligence has identified that imported wine consumers are well-educated and well-informed, tech-savvy and travel internationally. Young consumers are notably less price-conscious than older generations. Those aged under 35, growing up during a time of expanding wealth and without experience of contraction, are notably less price-conscious than older generations. Younger consumers are particularly fond of buying wine from upscale imported food and convenience stores, which reflect their aspirational, modern, convenient city lifestyle. They are drinking in similar proportions to older consumers in the white wine, beer, rosé, baiju, whisky and cognac categories; but significantly more Champagne, cocktails, ready-to-drink, cider and sake. Taste is the number one consideration for these consumers.
Wine Intelligence forecasts that – similar to other global markets – wine consumption may start to plateau or decline in the long term, as it becomes part of a broader repertoire.
Broader business sentiment is optimistic
According to Westpac’s Australian China business sentiment survey this year, mainland China is seeing signs of a maturing market. The businesses surveyed continue to be optimistic and forecast profitability for 2019, noting the opportunities in the rising middle class and evolving consumers.
Wine Australia’s next quarterly update of Australia’s wine exports will be released on 1 May 2019. A copy of the report can be accessed by levy-payers here from 1 May.