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Rabobank Wine quarterly - update on the Chinese wine market

Fuseworks Media
Fuseworks Media

Over the past decade, the Chinese wine market has been the fastest-growing in the world, undergoing changes at a breakneck pace. For wine marketers, China offers an enormous opportunity, but requires a dedicated focus in order to understand the ongoing changes - according to Rabobank’s latest global Wine Quarterly.

While the volume of imported wine (from global suppliers) into China has surged by "nearly fourfold in a decade" as it benefits from a high-quality, premium image in the mind of the Chinese consumer, the report says 2018 saw the first decline in Chinese wine import volumes since 2014.

"Overly optimistic expectations and aggressive investments in the wine market have resulted in oversupply and overstocked products, and the market is working to draw down existing inventories," the Wine Quarterly says.

The report also cited a slowdown in economic growth, notable price increases of French wines, fading consumer confidence, the weakening of the renminbi, and uncertainty in US-China trade as contributing to the overall decline in imported wine.

While France and the US have seen the biggest declines in the Chinese market - with French wine imports falling by 23 per cent in volume and four per cent in value in 2018, and US wine down by 25 per cent in value over the same period - the report says "Australia has emerged as the clear winner among imports".

And while the Chinese wine market appears to be slowing, the report says this is likely to be a "temporary phenomenon".

"China is expected to remain an attractive export market moving forward, though the competitive landscape for both foreign and domestic wine companies continues to evolve quickly", the report says. This includes changes in consumption habits, the competitive positioning of imports, the rapid changes in the retail environment - which it says is evolving faster than anywhere in the world especially in e-commerce with the rise of ‘new retail’ - and adjustments in the strategies of domestic players.

New Zealand

The report says New Zealand wine exports have grown strongly in the first four months of 2019, recording an 11.0 per cent increase in volume and 10.5 per cent increase in value on the same months in the prior year. Senior wine analyst Hayden Higgins said the increase in wine exports in early 2019 was largely driven by stronger sales into the UK market.

"The majority of the increase in export value was derived from exports to the UK, with an early rush of imports by the UK in the lead up to the initial Brexit date. Q3 and Q4 may again bring a similar profile for NZ wine exports in the lead up to the new date, especially with new Prime Minister Boris Johnson proposing to leave the EU with or without a deal," Mr Higgins said.

Rabobank’s senior wine and horticulture analyst, Hayden Higgins is available for interviews to discuss implications for the New Zealand wine sector.

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