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Chinese consumers begin to love wine

The stellar growth of the China wine market in recent years has caught the attention of wine suppliers the world over. However, as the China market expands, both domestic and foreign wine companies continue to grapple with how to most effectively identify, reach and communicate to a very diverse and unfamiliar consumer base

A new report from Rabobank's global Food & Agribusiness Research and Advisory department, released at the 2012 VinExpo, the international wine and spirit exhibition for Asia-Pacific held in Hong Kong this week, looks at the dynamics of the wine market in China.
In the report, Rabobank says that the stellar growth of the China wine market in recent years has caught the attention of wine suppliers the world over. However, as the China market expands, both domestic and foreign wine companies continue to grapple with how to most effectively identify, reach and communicate to a very diverse and unfamiliar consumer base. Rabobank's research identifies the difficulty faced by a number of global brand owners to bridge the gap between the overall growth of the market and the opportunities in conventional market channels.
The supply of grape wine rose 14% year over year to roughly 1.4 billion litres in 2011, of which 17% (or 241 million litres) was foreign bottle wine, a 65% increase year over year.
While the growth story remains intact, suppliers are cautioned to be mindful of a number of apparent gaps. Chinese domestic wine companies have been largely caught off guard by competition from foreign wine imports. However, they are restructuring their businesses to ensure they are not denied their share of the market's future growth. Just as in the U.S., domestic companies are uniquely placed to use their business networks, market intelligence and distribution reach as a powerful platform to promote the wine category—including foreign wines—to Chinese consumers.
Wine has taken share from producers of premium Chinese baijiu, a local white spirit traditionally consumed and offered during government and business entertainment gatherings.
Attracted by the strong volume growth and sound margins being observed in the imported wine market, the total number of importers is estimated by China Customs to have reached 3,863 companies in 2011, up around 73% from a year earlier and a remarkable 200% in just five years.
Wine is well positioned for the future, with a growing number of younger (between 20-39 years old), more affluent consumers who are increasingly exploring wine as a viable alternative.
The Rabobank report predicts that brands are expected to become increasingly important to consumers in the grocery, hotel and restaurant channels due to the clear need for brands to better guide their purchase decisions.

by Ernesto Vania
04 june 2012, Technical Area > Grapevine & Wine

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