Since the economic reform started in 1979, the country has witnessed a rapid surge of economic development and the size of the middle class. Chinese consumers quickly realize that nothing pairs better with luxury lifestyle than the finest imported vintage from some renowned vineyards aboard. Hence, imported wine soon becomes one of the status symbols of the middle class. The imported volume of wine in China has grown significantly from 181.8 million liters in 2008 to 729.7 million liters in 2018, at a CAGR of 14.9%.

There are a few reasons contributing to the aforesaid growth. First of all, with respect to the consumers’ perception on wine, Chinese consumers usually associate grape wine to the western countries’ longstanding winemaking history. Since grape wine imported from western countries is typically perceived as premium quality featured with a rich culture, Chinese consumers are leaning towards imported grape wine. Secondly, imported wine has a price advantage. Its price offers an incentive for Chinese consumers when purchasing wine. Prior to 2012, China imposed an average tariff of 10% or higher on wine imported from New Zealand, Australia and Chile. However, after China’s signing of the bilateral free trade agreement, zero tariffs were gradually implemented, thus stimulating the consumption of imported wine. In addition, the widespread wine knowledge and culture are largely responsible for the popularity of imported wine among the consumer market in China. Benefited from the continuous wine education undertaken by wine distributors and retailers, wine knowledge has been promoted in the past decades, which in turn boosted the consumption of imported wine. Chinese consumers, especially the young generation, learn to love and appreciate wine. In addition to business needs, they would also buy quality wines for their own enjoyment. Looking forward, we believe the market share of imported wine will continue to rise steadily.

The chart below sets forth the total import value of the wine from 2008 to 2018:
Sources: Wind; ShineWing

Imported Wine Market Share is Growing Steadily
The consumption of wine in China witnessed an overall upward trend from 2008 to 2018 despite a slight drop between 2012 and 2014 caused by tightening overspending on government reception and overseas trips. The expansion of the market was mainly driven by the increasing needs of imported wine. The production volume of wine in China decreased since 2012, while the import volume of wine in China has enjoyed significant growth, especially after 2014. The ratio of import volume of wine to consumption volume of wine increased from approximately 12.9% in 2008 to 44.1% in 2017, underscoring the shifting consumer preferences from domestic brands to imported wines.

The consumption, production and import volume of wine in China from 2008 to 2018 are shown below:
Sources: Wind; ShineWing

The percentages of domestic production volume/import volume to consumption volume of wine in China from 2008 to 2017 are shown below:
Sources: Wind; ShineWing

Tariff Elimination Spurs Consumption of Imported Wine
The tariff elimination on imported wines brought challenges to domestic wine brands as imported wine squeezes out local wine brands which previously dominated the market. As the figures indicated, the average price of imported wine was slightly decreased from US$4.8 per liter in 2008 to US$4.7 per liter in 2017, at a CAGR of -0.3%. Chinese consumers are sensitive to the price drop of imported wine. The gradually decreasing tariff on imported wine has translated the drop in retail price, stimulating the consumption of imported wine.

The chart below illustrates the average import price of wine from 2008 to 2018:
Sources: Wind; ShineWing

If there are any aspects which we may assist, please do not hesitate to contact:

Partner - Mr. Kevin Lam
Kevin.lam@shinewing.hk (Tel. 3583 8000)
Assistant Manager - Mr. Tom Huang
Tom.Huang@shinewing.hk (Tel. 3748 8231)