The outstanding growth of the wine culture in China
China is not only the biggest supplier’s market worldwide but also is becoming a major consumer of every single product exported from the old continent and America. The country has just beaten an unthinkable record at the beginning of the century: it is currently the highest consumer of red wine in the world, surpassing France, which held the top spot since there are reliable statistics.
Last year, China consumed 155 million boxes of red wine (1.865 million bottles) meaning an increase of 136% over the past five years. It is followed by France with 150 million boxes, Italy (141), USA (134) and Germany (112), according to the study that “IWRS” conducts every year for Vinexpo fair.
Vinexpo is the global forum for the wine and spirits industry. Next edition will take place on 15 and 16 November 2016 in Tokio and Melenco will be present.
Do Chinese people drink so much wine?
The answer is no. Much of the population consume wine occasionally, just for holidays or celebrations. The average consumption is 1,5 litters per person per year which is far from the 52 litters per person per year of France.
However, what has made China one of the largest consumers in the world is its big population. China has 1.4 billion, with only $ 7,000 of income per capita and. For instance, in Hong Kong there are 7.3 million with $ 55,000 of income per capita
Therefore, in terms of sales and consumption worldwide, China wine’s market is very appealing both for local wineries and foreign producers. It is considered to be one of the markets with greatest growth potential in the world, growing at an annual rate exceeding 10%.
What kind of wine they consume?
The key of consumption in China is undoubtedly red wine. One of the main topics of this success is its color and all what it represents. “Red is a very positive color in Chinese culture and is synonymous with wealth, power and luck. And red is also the color of the country” said a spokesman for Vinexpo. Even though white wine is not so popular, maybe because the color symbolizes death, it still has its audience: women. Also, it is becoming an important market where producers are focusing their effort.
It is important to know that foreign brands dominate the segment of high value wines for its prestige and quality. Imported wines are marketed mainly in large urban centres with consumers of middle and high income, including foreign residents who can afford a higher price. The main distribution channels are hotels, restaurants and catering services, although sales are also growing in large chain supermarkets, wine shops and online specialized sites.
Tariff and tax policy
Imported wines have a high fiscal and tax burden, in the case of bottled wines and sparkling reach 48.20%, while bulk wine 56%. This is because, in addition to the corresponding import tariff, imports of wine pay income tax and value-added consumption tax, which are then recovered partly in the first sale. At any rate, note that the free trade agreements that agreed China with high wine industry countries will involve a medium-term increase competitiveness of its products in the chinese market, which will require from competitors greater effort to position their brands, as have French wines so far.
China has been importing products of 2204 tariff heading (sparkling wine, wine bottle, bulk wine and other grape must) at a value of U $ S 200 million and a volume of 150 million litters. Except in the case of the other grape must, the rest of products showed very high rates of annual growth. For example, foreign purchases of bottled wines grew more than 90% in value and volume, while bulk wine increased by 71% in value and by 120% in volume. Moreover, regarding value bottled wines continue to improve their market share of import (currently around 55%), although participation in a volume of bulk wine is still higher than 81%. The high percentage of purchases of bulk wine mostly responds to the practice greatly expanded in the country. French wine dominates the Chinese market and is followed by Australia and Chile.
So all this data makes China a fascinating country to market wine. Cheers!