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French wine’s defeat to Australia in figures

One of the key events that defined China’s wine market last year is that Australia surpassed France for the first time as the country’s biggest wine supplier.

It is a seismic change that was largely expected given its Free Trade Agreement with China and Australia’s extensive and localized marketing campaign that successfully converted the country’s French wine drinkers to Assuie followers.

Australia now took up 35.5% of China’s bottled wine market, ahead of France’s 28.5%. Despite the overall slump in the country’s import value last year, Australia contributed to over US$864 million worth of bottled wine imports compared with France’s US$693.3 million, according to data released by the country’s official trade org, China Association of Imports and Exports of Wine and Spirits (CAWS).

But aside from overall import value and market share, what are the other parameters to gauge Australia’s surge?

How many French wine specialized importers exited the market altogether? How many tightened up their wallet and capped their import value below US$10 million, or US$5 million in 2019 and early 2020?

We analysed the first set of official data released by CAWS this week for some answers.

French exodus 

French wines in China
Graph 1: French wine imports in China compiled based on data released by CAWS.

The most direct sign that French wines are losing out to Australian wines is the number of importers of various sizes that are divesting in French wines.

From 2018 to 2019, roughly 85 French wine specialized wine importers either exited the market or switched to something else during the period, as shown in the graph above (2478 v.s. 2393). Bottled French wine’s total import value as a result shrank from US$1.06 billion to US$684 million last year.

In the first two months of 2020, the exit continued, with another 243 French bottled wine importers quitting the market.

In contrast, number of Australian bottled wine importers surged by 196 from 2018 to 2300 in 2019, according to CAWS.  Admittedly, virus outbreak also strained Australian wine importers, wiping out 130 companies, a more moderate drop compared with France’s 243.

Big players quit 

french wine value
Graph 2: Big-order French wine importers drop in number and value, compiled based on data from CAWS.

What’s more telling in depicting in French wine’s slide in China is the contraction of big-order importers, as they tighten up their wallet due to softer demand.

In 2019, the number of French wine importers with aggregated import value over US$10 million decreased from 2018’s 10 to 8, which in return pushed down the category’s total import value from US$402 million to US$144 million, a 64% drop year-on-year, which is described by CAWS as a “wait cut-like sharp drop” (腰斩式锐减) referring to a drastic decline. (See graph below)

change france
Graph 3: big importers are exiting French wine category based on data released by CAWS.

“What contrasted the drop in French wine was Australian importers of the same category grew in number and surpassed France. Overall import value also overtook France,” CAWS analysed, without providing detailed figures on Australia.

The virus outbreak in China this year further discouraged French wine importers, the association added. In the first two months of this year, not one French wine importer imported wines worth over US$5 million, it underscored, highlighting the extent to which French wines are losing its lure among Chinese consumers.

The shrinkage in top importers also quickly spread to smaller French wine players.

Medium-sized French wine importers, referring to those who imported French wines between US$1 million and US$5 million, also saw an exodus. Number in this category fell from 2018’s 144 to 2019’s 92. As a result, import value decreased from US$276 million to US$180 million.

“For both the data shown in 2019 or the first two months of the year, medium-sized French wine companies lag behind Australian counterparts in quantity and overall value,” commented CAWS.

Same as Australia, most French wine importers are operating small businesses. For small-sized importers, referring to import value between US$100,000 and US$1 million, the number fell to 749, down from 2018’s 828, contracting import value to US$229 million.

Will Australia maintain its lead over France in China this year? Let us know your thoughts in comments.

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