China has lost out on its attractiveness as a wine market, according to the latest report by Wine Intelligence, amid the country’s slowing economic growth, escalating China-US trade war and depreciated Chinese currency.
This is the first major international report showing that China is losing its lure to global wine traders, when changing geopolitical matters are tarnishing its trade image.
In the latest Global Compass 2019 report by Wine Intelligence, China’s ranking dropped to No.6, “mainly the result of the first sustained decline in imported wines in five years and slowing economic growth.” The report explains.
China’s wine imports last year have suffered a first drop in volume in five years since 2014, due to ongoing trade war and the country’s weakeaning economy, the slowest in two decades.
Wine imports in the first half of the year still showed no sign of growth, though dropping rate seemed to have slowed, according to figures released by Chinese research company ASKCI.
The latest fear for most importers came when Chinese currency yuan tumbled below the safe line of 7 per dollar last week, first time in 11 years.
This means costs for imports in general including wine would increase as profit margins narrow. China’s main wine importing countries including Chile, Argentina, South Africa and the US trade with China in US dollars.
Meanwhile, the US still remains as the most attractive wine market, thanks to the willingness of American consumers to trade up in terms of the price they pay for the wine they buy, while other categories such as craft beer and spirits compete more strongly for share of personal alcoholic beverage consumption, according to the report.
The report notes however in the US volume growth seen in the past decade “has largely subsided”.
Other countries in the top five most attractive wine markets are Canada, France, Germany and the Netherlands, which has jumped four places from last year’s ranking.
South Korea this year rose to prominence and landed in the top 10 list for the first time.
In other parts of Asia, India has entered the top 40 for the first time, based largely on growing import volumes though still from a relatively low base.
Commenting on the report, Luis Osorio, Senior Project Manager and editor of Compass, said: “The good news from Compass 2019 is that more people are paying more money for their wine around the world than ever before. On the other hand, large numbers of wine drinkers are moderating their consumption of wine, perhaps because of health reasons, perhaps because other alcohol categories are taking share.
“The key uncertainty remains how the global trade picture changes during the next 12 months. An escalation of the Trump tariff war and the threat of a disorderly Brexit are known factors, but unquantifiable at the moment given the range of possible outcomes they represent.”
