Wine imports to China saw a ’sharp decline’ towards the end of 2018, after steady growth for ten years, new data from the IWSR Drinks Market Analysis has shown.
Following poor mid-autumn festival sales, the final quarter of the year saw a crash in wine imports across the country's 4,000 importers.
While value sales were relatively stable, Chinese Customs and the China Association of Imports and Export of Wine & Spirits (CAWS) reported volume losses of -8% to -9%.
According to IWSR, an economic slowdown in the country accompanied by a looming trade war with the US impacted wine sales.
In China, wine, like smartphones and other luxury goods, tends to be more vulnerable when there is a change in economic climate, according to IWSR.
'Drinkers tend to be made up of the cosmopolitan, educated and entrepreneurial young who gained the most from rapid economic expansion,' it reported. 'So, when the economy falters, demand for imported wine will waver.'
Consistent Growth
The dip in sales follows a bumper period for wine imports into China, with imports rising nearly tenfold in the ten years leading up to 2017. Indeed, in 2017, imports were in the double-digits, according to IWSR consumption figures.
In 2017, IWSR reported, French wine comprised 39% volume share of total imports to China, followed by Australia, Chile, Spain and Italy.
The strength of the euro relative to the renminbi may also have played a part in the decline in wine sales to China last year. While a weaker euro helped boost imports in 2017, the recovery of the currency in 2018 made wine more expensive, potentially putting off casual drinkers.
The market for local wines, while doubling in size in the five years prior to 2013, has now accelerated, according to IWSR, as Chinese wine is 'not seen as glamorous as imported alternatives'. In addition, growing conditions in China mean that it is difficult for Chinese producers to compete on a quality basis with imported wines.
According to data from China’s National Bureau of Statistics, local wine production dropped by nearly 40% last year.
'Stakeholders in the imported wine market in China are right to be concerned,' the IWSR reported. 'With the two main causes of the deterioration in wine imports related to exchange rates and fading consumer confidence, any economic improvement will reinstate demand and growth. Importantly, it will not mean that imported wine is falling out of fashion with its audience.
'Given the value of wine imports held up despite some volume losses, it would suggest that as with baijiu, the interest in premium products is being maintained,' it added.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
