China’s millennials and Gen Z who wield “considerable purchasing power” are reshaping China’s multi-billion wine market, as they become the main drinking force behind expanding country’s overall wine market size and per capita consumption in the next five years, according to a latest report by leading data and analytics company GlobalData.
The power of the millennials and Gen Z will see the country’s wine market almost doubling in size in 2026 and consequently average spending on wine will also jump notably.
According to Global Data, Chinese wine market is forecast to expand from RMB 268.6 billion (US$42 billion) in 2021 to RMB 462.4 billion (US$72.2 billion) in 2026, registering a compound annual growth rate (CAGR) of 11.5%, as a rebound in economic and social activities will spur on-premise and off-premise wine sales.
While the country’s per capita wine consumption has slightly contracted in the past five years from US$36 to US$35.6 in 2021, it is set to increase to US$60.1 in 2026, up by 68.8% in line with economic recovery and increasing household disposable income.
This means per capita spending on wine in China it will almost double the average spending in Asia Pacific by 2026 but still below the global average of US$84.3, according to the data firm.
The market growth, as the firm explains, will be primarily driven by still wine category, which is set to register the fastest value CAGR of 11.5% over the five-ear period, followed by the sparkling wine category with 11.3% CAGR.
“Wine is becoming a popular alcoholic drink among Chinese consumers owing to its perceived health and beauty benefits, and the influence of Western lifestyle habits. Young Millennials and Gen Z adults, who wield considerable purchasing power, are reshaping the Chinese wine market. Wine vendors are adapting the product offering and marketing and branding activations to suit this young cohort,” says Bobby Verghese, Consumer Analyst at GlobalData.
“In addition, wine brands are building their presence on leading ecommerce portals such as Alibaba Tmall, targeting these digital immigrants and natives,” he adds.
However, the report noted that the Country’s stringent Covid policy has undermined market growth in 2021. Lockdowns and restrictions resulted in value sales in local currency declining annually by 2.7% in 2021. On-trade sales contributed the bulk of wine sales in China in 2021, followed by food & drinks specialists and hypermarkets and supermarkets.
Growth of social media marketing and e-commerce platforms also contributed to attracting more younger consumers in wine. “Wine companies are leveraging digital and social media marketing strategies, including live streams with key opinion leaders and celebrity brand ambassadors to connect with younger audiences. Manufacturers are also introducing small-size wine bottles to encourage novice drinkers to try out their brands or labels,” Verghese adds.
The report noted that the country’s top selling wine brands are still dominated by leading domestic producers. Yantai Changyu Pioneer, Dynasty Fine Wines Group, and Tonghua Grape Wine were the top three companies in the Chinese wine market in volume terms in 2021, while Changyu and Dynasty were the leading brands.
“The stringent COVID-19 lockdowns in key markets such as Shanghai, Beijing, and Chengdu provinces have taken a further toll on the wine market in 2022,” admits Verghese.
“As the pandemic dissipates and the economy rebounds, wine consumption is set to soar. Overseas winemakers from France, Chile, and the US, and local wineries are in a race to fill the void left by waning sales of Australian wines, which were hit badly by the anti-dumping tariffs and the political standoff between the Chinese and Australian governments,” he concludes.