Dear wine producers, sooner or later, it comes down to focusing on China

New frontiers and new markets. In a delicate and uncertain period, wine is knocking on new international doors among promising markets and regions that have never taken off. Asia continues to be the most complex continent for wine producers, with great potential but also significant disappointments in recent years. Consumption is on the rise, fueled by rapidly growing economies like India, Thailand, and Vietnam. Yet none of these markets can match the volume of sales in China, which remains the driving force behind wine consumption in Asia.

The impact of Chinese demand

A recent survey conducted by YouGov in the Greater Bay Area (GBA) highlighted that consumers in the area in 2024 drank three times more often than Hong Kong residents. They also chose to purchase more frequently from wine specialists (49%) than from supermarkets (37%). About 25% of all wine imports into mainland China arrive through Guangdong, and word of mouth was listed as the most common factor influencing brand selection, indicating that direct contact with end consumers is essential for building brand reputation.

A resilient market that remains a crucial hub for the wine industry despite a challenging period for both wine and the country itself. Since 2018, wine imports in China have decreased from 452 million liters to 249 million liters, according to the National Bureau of Statistics of China. This phenomenon is due to various factors that have impacted consumption, including COVID-19 (with the associated total lockdown), punitive tariffs on Australian wines, and high U.S. interest rates. Consumer spending on non-essential products has also dropped significantly compared to pre-COVID levels.

In terms of alcohol consumption, wine holds a 3% market share of total sales, equivalent to about half a liter per person per year (out of approximately five liters of total alcohol per person). Demand is growing with a focus on white wines, and there is increasing interest in this category thanks to the ever-improving quality of locally produced wines.

Asian Markets

Although showing positive signs in terms of imports, Asian regions cannot compete at the same level of demand. Vietnam is the largest per capita consumer of alcohol in Asia, with over nine liters per person, but 91% of this is attributed to beer, and only 0.8% to wine. India's wine imports in 2023 amounted to 7.8 million liters compared to China's 249 million (Vietnam’s 23 million and Thailand’s 26 million in 2022), according to Statista (a global data and business intelligence platform). Japan plays a crucial role, with wine imports reaching 171 million liters in 2023, bringing per capita wine consumption to three times that of China, according to Statista. However, as Rob Temple notes in Drinks Business, this is not a trend that will necessarily be sustainable in the long term.

"So, what can producers and distributors do in the meantime? Being visible and active in the market is essential to staying in the consumer’s mind, maintaining market share, and being ready for a consumer spending recovery. Not all importers and distributors can access the various channels in highly diverse regions. It is therefore crucial to choose the right partner for a single channel or plan a regional strategy. Having a partner that can execute consumer engagement programs will go a long way in establishing long-term brand growth," says Rob Temple.

Over the years, the Chinese market has seen many false starts, but the conditions for sustained growth are still present in an ever-evolving context. Sooner or later, the right time will come, and it's essential to be prepared. Meanwhile, the OIV has estimated the market's final consumption in 2024. It is expected that 913.9 million liters of wine will be consumed at home, while out-of-home consumption should amount to 739.3 million liters. The total volume of consumption predicted for 2024 is 1,653 million liters. The foundation is already there.