China’s wine industry is probably facing the most challenging time since anti-corruption campaign in 2012 that cracked down on ostentatious spending and luxury lifestyle.
Reeling from last year’s sluggish performance that saw volume dropping by nearly 9% for roughly the same amount of import value, the country’s imported wine sector in the first half of the year did not catch a breath either.
Imports suffered double-digit drops in both volume and value in the first six months of the year, 14.09% for volume and 19.46% for value, according to data released by the country’s official trade organisation China Association for Imports and Exports of Wine & Spirits (CAWS).
Hampered by China’s slowing economy and uncertainties with ongoing China-US trade war, more than 2,000 wine importers (bottled wine only) went bust in the first five months of the year, as vino-joy.com reported earlier.
This means the current number of operating wine importers has shrunk down to the same level as 2014, which numbered at 4,152 amid anti-corruption campaign, based on figures released by CCCFN.
The second half of the year is expected to see more reshuffling. The market will become more concentrated, with more “opportunist” companies and brands expected to be booted out of the market, said head of CAWS, Wang Xuwei, when interviewed by Chinese media.
During the first half of the year, another major change took place when Australia overtook France to become China’s biggest importer by value. Meanwhile, Chile still remains the country’s biggest importer in terms of volume.
Among the top 10 wine importing countries to China based on CAWS figures, nearly all suffered drops in volume and value except one country in the first half of the year.
Scroll down the pages to find out more about China’s top 10 importers for bottled wines from January to June.
*Note: the ranking is based on value for bottled wine imports only
No. 10 Germany
Import value: US$11.1 million
Import volume: 2.1 million litres
German wine promotion in China seems to be picking up with consumer and trade events featuring Riesling Weeks in Hong Kong and mainland China. Its overall wine exports to China remain small, with market share less than 1%.
In the first half of the year, the country exported 2.1 million litres of bottled wine worth about US$11.1 million to China, representing a drop of 28.7% in volume and another 25.25% in value.
No. 9 Argentina
Import value: US$11.38 million
Import volume: 2.37 million litres
Compared with its South American neighbour Chile, Argentina has a lot to catch up at least in terms of wine performance in China.
In the first six months of the year, its bottled wine exports to China slumped by 6.16% to US$11.38 million, while its volume dropped by 8.41% to 2.37 million litres over the same period last year.
But compared with Chile, Argentina’s per bottle price more than doubled that of its neighbor at US$4.81 per litre. Chile’s per bottle price is US$2.08 per litre.
No. 8 South Africa
Import value: US$12.89 million
Import volume: 3.75 million litres
South Africa is experiencing setbacks in Chinese market.
Data from the CAWS showed the country suffered a 53.67% drop in volume, even higher than the now heavily taxed American wines. Its value saw another 37.03% drop to US$12.89 million during the first six months of the year.
Aside from impacts of China’s tepid demand and weakening Chinese currency renminbi, last year South Africa’s low production might have contributed to the drop as well.
In South Africa, drought significantly impacted 2018 production (9.5 mhl), with a decline of 12% compared with 2017. The country recorded its lowest production level since 2012, according to OIV.
No. 7 Portugal
Import value: US$13 million
Import volume: 4.07 million litres
Portugal accounts for 1.06% of China’s imported wine market.
The country exported US$13 million worth of wines to China in the first six months of the year, a drop of 9.43%. Its volume declined by 16.88% to 4.07 million litres.
Despite the drops, its ranking in H1 is a jump for the country which fell out of top 10 ranking altogether last year.
No. 6 The US
Import value: US$20.31 million
Import volume: 4.11 million litres
The China-US trade war has virtually upended American wine hope in mainland China. With rounds of retaliations, American wine exports to China slumped by 56.78% in value and 46.82% in volume, the worst performing country in the top 10 chart, in H1.
By June 1 this year, punitive tariffs slapped on American wines together with VAT and excise amounted to 93%, nearly double of regular taxes on imported wines.
What’s worse, China has announced a new round of punitive tariffs on American products including wine that’s expected to go into effect this December.
This would probably be the final nail on coffin.
Starting from December 15, tariffs levied on American wines will rise to 74%, bringing total taxes to 118.46%.
Unless China and the US decided to start all over and reset trade talks, chances for American wines to see a rise in China are unlikely.
No. 5 Spain
Import value: US$72.7 million
Import volume: 31.7 million litres
China imported 31.7 million litres of bottled wines from Spain valued at US$72.7 million, representing a drop of 24.17% in value and 21.58% in volume during the first six months.
Its market share stands at 6.54%. The country’s exports to China are mainly on the lower-end wines. Its per bottle price ranks among the lowest in the top 10 countries at only US$2.29 per litre, slightly higher than Chile’s US$2.08.
No. 4 Italy
Import value: US$80.4 million
Import volume: 19.27 million litres
In terms of overall ranking, Italy remained the same as last year. Interest for Italian wines is growing as more promotions including Vinitaly Roadshow and Great Wines of Italy by James Suckling are rolling out in mainland China.
Next November, Vinitaly is also set to organise a wine fair in Shenzhen to connect wineries with local wine trade to further promote Italian wine sales.
During the first six months of the year, imports for bottled Italian wines dropped 17.63% to US$80.4 million, while volume shrank by 5.26% to 19.27 million litres.
It accounts for 6.54% of China’s market share.
No. 3 Chile
Import value: US$194 million
Import volume: 93 million litres
Chile is the only country among the top 10 that saw positive growths in both volume and value, defying the overall downward trend.
It ranks as China’s biggest wine importer by volume but in value its ranking would slide to No. 3 due to its low export price, the lowest among 10 countries at US$2.08 per litre for bottled wines.
Its exports to China in the first six months of the year grew by 5.53% to US$194 million, while its volume jumped 11.29% to 93 million litres, unfettered by China’s overall weakening wine demand.
Its market share stands at 15.79%.
No. 2 France
Import value: US$350.9 million
Import volume: 69.8 million litres
This year one of the most important changes in China’s imported wine market is that France has conceded to Australia after years of dominance in China’s imported wine market.
Its overall import value dropped by 38.88% from January to June to US$350.9 million, while its volume decreased by 27.01% to 69.8 million litres compared with the same period last year.
Bordeaux exports to China in particular saw sharp decreases, with value dropping by more than 30% last year, as vino-joy.com reported earlier.
French wine’s market share also shrank to 28.56% in China, a sharp contrast to a couple of years ago when its market share was close to 40%.
Overall interest for Bordeaux En Primeur in China waned quickly, as importers find increasingly hard to make profits from the Bordeaux future campaign when back vintages are sometimes cheaper.
However, Bordeaux Wine Council is ramping up campaigns to promote everyday drinking Bordeaux wines in mainland China and Hong Kong. Results are yet to be seen in import figures.
No. 1 Australia
Import value: US$414.5 million
Import volume: 74 million litres
As expected, Australia has surpassed France as China’s biggest wine importer by value, as tariffs on Australian wine has now reduced to zero, thanks to the two country’s Free Trade Agreement.
The country’s wine exports to China remained more or less the same in terms of value (down 0.59%) at US$414.5 million, while its volume dropped 17.34% to 74 million litres.
As CAWS describse it, “Australia has consolidated its leading position in China” with a widening market share of close to 34%.
It’s worthy to note as previously underlined by Wine Australia, there’s a premiumisation in Australian wine exports. This is affirmed in CAWS data where it showed per litre price rose 20.26% to US$5.6.
With the country’s government stimulus package for promoting wine exports, Australia is expected to maintain its lead in China despite slower growth rate.
Compared with Chile, Argentina, South Africa, Australian wine exports are traded in China using Australian dollars instead of US dollars, making it slightly more immune to weakening Chinese currency renminbi which is pegged to US dollars.