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Chinese Wine Market "No Longer Crazy"

Wine consumption in China fell 2.5 percent in 2013 after a decade of growth
© Fotolia | Wine consumption in China fell 2.5 percent in 2013 after a decade of growth
Wine producers and retailers are looking beyond the People's Republic to grow sales.

Young middle-class drinkers from Asia's emerging economies are being targeted as China's voracious appetite for wine dries up, organizers said ahead of the region's largest-ever wine and spirits fair.

The Vinexpo trade show, which opens Tuesday in Hong Kong and is set to attract more than 1000 exhibitors from around the world, comes as Chinese wine consumption saw its first decline in a decade last year, partly influenced by Beijing's anti-corruption measures and a more sluggish economy.

"There was a slowdown of the economy in China last year. There was also this anti-luxury message coming from Beijing," said Guillaume Deglise, chief executive Officer of Vinexpo Asia-Pacific.

Overall wine consumption in the country dropped by 2.5 percent in 2013, the first decline after 10 years of uninterrupted growth at an astonishing rate of around 25 percent per year, according to a Vinexpo survey.

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Claire Henry, Hong Kong-based manager for French online wine auction company said that with the austerity and restriction drive led by Chinese president Xi Jinping, the country's market "is no longer crazy".

"It's not an easy market now. China has closed a bit of its door," she said.

A drop in official parties and dinners – part of the austerity drive – is "a sign of this evolution" she added.

However, she added, such consolidation could result in higher market quality, with fewer counterfeit wines and less "opportunists" seeking profits, rather than purchasing wine for its quality.

China overtook France as the world's largest consumer of red wine in 2013, guzzling more than 155 million 9-liter cases or 1.865 billion bottles that year, according to Vinexpo.

It remains the region's leading wine consumer and the world's fifth-largest market for wine overall, overtaking the United Kingdom in 2012.

With demand growing in other Asian markets, however – for spirits as well as wine – drinks makers are starting to look beyond China.

"China will remain by far the number one market for the future here in Asia... (but) there are many more markets in Southeast Asia. Vinexpo is not just about China," said Deglise.

He expected double-digit market growth in the next few years in countries such as Vietnam and Thailand, where a growing middle class is creating an aspirational new wave of drinkers.

According to Vinexpo, 40 percent of wine consumed in Asia is outside China.

"We talk about a lot of other markets like Vietnam, the Philippines, Thailand, Korea or Taiwan. All of these markets are expanding. It's very important for... all the importers coming from these countries," Deglise said.

Younger drinkers with money to spend are also driving a market in beer and spirits over expensive wines, analysts say. Global wine consumption increased by 3.2 percent in volume between 2008 and 2012, while in the same period, the volume of spirits consumption grew by 55 percent in Asia-Pacific.

"The Asia-Pacific region is largest in the world for spirits, China is the number one market for spirits," Deglise said.

The three-day fair will include a bar showcasing cocktails for the first time, he added.

"For youngsters, they are going to consume more beer and cocktails, these are social networking drinks," Hong Kong-based analyst Mabel Lai said.

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