China’s domestic producers sit on unsold vintages

China’s decline in wine sales since the government crackdown on corruption has primarily affected domestic producers, not importers.

Bolongbao

Producers such as China’s Château Bolongbao were reputedly reliant on demand through government channels

Although the headlines have focused on falling demand of grand cru classé claret, particularly Château Lafite, since president Xi Jingping introduced his “austerity measures” in 2013, it is domestic wine producers that have been hit hardest by the new political climate, according to Beijing-based Fongyee Walker.

Walker, who founded wine school and consultancy called Dragon Phoenix in China eight years ago, made the announcement while addressing attendees of a seminar on the China wine market at ProWine China in Shanghai last week.

“When you see China consumption figures there is a decline, but remember that domestic and imported wine are completely different worlds – and the drop is mainly in domestic wines,” she stated.

Continuing, she highlighted the severity of the situation for many domestic wineries.

“I’ve been told that a lot of producers are now sitting on 2-3 completely unsold vintages of wine… so the market is falling, but it is very much domestic wine that is affected, rather than imported,” she said.

Indeed, she expressed her optimism for imported wine in China.

“What we see is a year-to-year, buildable, sustainable increase in imported wines, so from what I see the future is bright,” she commented.

After the event, speaking exclusively to the drinks business about the situation for domestic wineries, Walker said that the problem was their reliance on the government gift giving and banqueting market – areas the new leader has attempted to control.

“A lot of the Chinese château/domaine-bottled wines were sold through government channels,” stated Walker.

What will these producers do with their unsold stock?

“I have no idea,” she said.

In a prensentation on the Chinese wine market given ahead of Walker, Richard Halstead from Wine Intelligence showed how imported wine sales have continued to grow, although the rate of this increase has slowed since 2012.

“Imported wine continues to grow in China, but at a rapidly slower rate,” he said. Indeed, IWSR figures show how the growth rate of imported wines has slowed dramatically from 2012 onwards, but domestic wines, on the other hand, have actually suffered from a decline, with sales down by as much as 23m cases since 2012.

Still light wine consumption in China

silver heights

The Silver Heights winery in Ningxia. Source: Wine Explorers

Imported wines (2010-2014)

2010 16m cases
2011 27m cases (+ 60%)
2012 30m cases (+ 10%)
2013 31m cases (+5%)
2014 32m cases (+3%)

Domestic wines (2010-2014)

2010 109m cases
2011 129m cases (+ 18%)
2012 142m cases (+ 10%)
2013 128m cases (- 10%)
2014 119m cases (- 7%)

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

We encourage debate in the comments section and always welcome feedback, but if you spot something you don't think is right, we ask that you leave an accurate email address so we can get back to you if we need to.

Subscribe to our newsletters

The Global Riesling Masters 2019

Deadline : 20th December 2019

The Global Pinot Noir Masters 2020

Deadline : 31st January 2020

Click to view more

Champagne Masters 2019

View Results

Rioja Masters 2019

View Results

Click to view more

Subscribe today to get each issue of The Drinks Business as soon as it's published, plus all the latest breaking news and access to our library of back issues.

Subscribe Today!

Subscribe to our daily newsletter

Stay up-to-date with the latest news about the international spirits industry every weekday lunchtime (GMT)