China’s wine trade is sanguine about a long-awaited reboot in wine market this year after the country abandoned its zero-Covid policy, but the optimism is tempered with caution as the recovery will likely be rocky.
After surviving what was described by wine trade as “the toughest year in domestic wine industry”, Chinese wine market welcomed an uptick in wine sales during the Spring Festival as many restaurants and bars are resuming business as usual.
Restaurant revenue spiked nearly 25% during the festival period from a year ago, according to a survey from the China Cuisine Association, while major retail and catering firms saw their sales jump nearly 7% year-on-year, state media CCTV reported citing figures from the Ministry of Commerce.
“There’s a good rebound during Spring Festival,” Li Zhiwei, a small wine importer in Beijing told Chinese language media Yicai Global, but the uptick came after what he described to be the most difficult year since he started his career, with his annual business dropping by 60% compared with pre-pandemic level in 2019.
While most wine merchants like Li are encouraged by the long-awaited jubilee, they are in no rush to stockpile as it still takes time to catch up with the pre-pandemic level.
In 2022, the Chinese wine industry has hit rock bottom in both import and domestic market. According to data published by Chinese customs, the total value of imported wines in 2022 is RMB 9.6 billion (US$1.4 billion), with a year-on-year decrease of 12.5%, indicating the fourth consecutive dip since 2019.
The significant reduction of corporate activities and gatherings under strict Covid restrictions in 2022 also meant that even during usual sales peaks like Mid-autumn Festival and National Day, overall revenue was around 30% to 40% lower compared to previous years according to many wine merchants.
Domestically, Chinese wine production also sank to record low. From January to November, the country’s total wine production plunged 32.1% to 180,000 kiloliters compared to 2021.
The swift lifting of Covid restrictions in late December last year has thus ushered in recoveries in dining, travel and consumption in January, bolstering optimism in a year of recovery in 2023.
“Many wine importers told me they hold a reservedly positive perspective on China’s wine and spirits market in 2023,” Lydia Xu, Founder of Shenzhen TOEwine Expo International, told Vino Joy News.
“It can’t be worse than 2022,” said Christopher Martinez, General Manager of Union Wines, when interviewed by Vino Joy News. He expected a strong rebound for F&B in Shanghai but the industry still needed more time to to go back to the same level of business as pre-Covid. “Many bars and restaurants are still struggling and trying to recover from the lockdown and terrible November and December,” Martinez added.
Perhaps the biggest indicator of how much the market has come back after three years of slumps will be the upcoming China Food and Drinks Fair (CFDF) in Chengdu this April. Considered a bellwether of China’s drinks industry, the fair would reflect market demand and gauge industry confidence.
“I am curious to see how many will attend the Chengdu wine fair this year. Will be a good indicator,” he continues.
-additional reporting and editing by Natalie Wang