Key China wine trends explained
By Amy Hayes
Wine Australia continues to offer good news for Australian Wine Exports to the Chinese market even though reports suggest a slowing of overall imported product.
Globally, China has continued to be a significant go-to for the wine industry at large, holding its position as fourth largest wine import market over the last five years. Growth from the market has been astronomical considering its position of 15th place just 10 years ago.
With such considerable growth in such a short timeframe, it was inevitable that the percentage growth would start to wane with the export volume of wine in overall decline by 15 per cent across sparkling bottle and unpackaged wine. In more positive news, value of Australian still wines held strong at AU$3.8bn, with both sparkling and unpackaged wine seeing growth of six per cent and 20 per cent respectively, while bottled wine saw a slight decline in value of one per cent.
These numbers aren’t an isolated event for the Australian market, with Reuters noting an obvious backstep across all imports to China offering the slowest rate (three per cent) seen since October 2016.
There have been a number of reasons for the decline, with Kirstin Hannon, Senior Market Analyst from Wine Australia saying at the recent WCA China-Australia Marketing Summit that evidence for the slip includes “easing in demand due to a slowing economy and unstable trade conditions.”
“Despite this, Australian business sentiment remains optimistic according to Westpac’s China Australia Sentiment Report released recently in both the short and long term” she continued.
While Australia has seen a slight dip in volume, it hasn’t been the worst hit by the slowing of conditions. Looking at most recent import data broken down by market, both Spain and France have seen a decline in volume for both bottle and bulk wine while those countries with Free Trade Agreements, Australia and Chile included have been seen to experience increases.
“France’s decline has been significant enough for Chilean imports to have surpassed French wine. China is the fourth largest export market for France, behind Germany, US and UK. French exports in the year ending January 2019 declined overall and China made up 84 per cent of that volume decline” Hannon said.
While the decrease in volumes seems discouraging, the bright side continues to be that value is still in growth. Australian business sentiment in China collected in 2019 confirms the brand reputation for Australia continues to be strong as well as Australia still holding its average price per litre for bottled wine. This, accompanied by the growth of unpackaged wine (42 per cent) a segment that makes up 27 per cent of Australia’s import mix still offers positive signs for the market going forward.
Even with these declining trends the core consumers for imported wine in the Chinese market are continuing to spend on western products (including wine) and are notably less price conscious then older generations.
“Those aged under 35, growing up during a time of expanding wealth and without experience of contraction and hardship, are notably less price conscious than older generations. And they have money to spend as they are not yet bogged down by mortgages and children,” Hannon said.
She added: “These younger consumers are particularly fond of buying wine from upscale imported food and convenience stores, which reflect their aspirational, modern, convenient city lifestyles. Implications are, like Wine Intelligence has seen in other markets, that wine consumption may start to plateau or decline in the long term.”
Regardless, China still continues to be an important market for Australian wine exports and with the competitive edge it has in the $50m package helping push ‘Brand Australia’ in the market, the prospects continues to be positive.