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China's decision to lift anti-dumping duties on Australian wine imports has revitalized the import wine market and could inject new vitality into the overall wine market. To help stakeholders better understand the latest developments, ChemLinked provides an overview of wine consumption, production, importation, competitive landscape, and the current challenges facing China’s wine market.
Wine consumption
In recent years, China's wine consumption has been on a downward trend. According to the International Organization of Vine and Wine (OIV), after peaking at 1,930 million liters in 2017, wine consumption in China has been declining since 2018, dropping to 680 million liters in 2023, with a compound annual growth rate (CAGR) of -17.32% from 2018 to 2023. Currently, China accounts for 3.1% of global wine consumption, ranking ninth in the world.
Although China remains one of the world's major wine markets, its per capita wine consumption is notably low, which recorded 0.6 liters in 2023. This indicates that wine drinking has not yet become a regular habit among Chinese consumers.
Wine production
According to data from the China Alcoholic Drinks Association, the total domestic wine production in China reached 300 million liters in 2023, halting the previous downward trajectory with a modest growth of 3.4% year-on-year(YoY). Despite this overall growth, wine enterprises above the designated scale (the revenue of main business exceeds 20 million yuan) saw a continued decline in production, dropping nearly 33% YoY to 143 million liters in 2023. The weak wine consumption market has led many wine companies to have financial difficulties, with some being forced out of the market. The number of wine enterprises above the designated scale decreased to 104 in 2023, less than half of the number in 2017.
Wine importation
China's wine imports also experienced steady decline from 2018 to 2023. Customs data shows that in 2023, wine imports fell to nearly 250 million liters, a YoY drop of nearly 26%, with the import value decreasing by 14.2% to 8.18 billion yuan.
The first half of 2024 saw a reversal in this trend. From January to June, China imported 130.84 million liters of wine, reflecting a modest 1.9% increase YoY. More notably, the import value surged by 24.1% YoY, reaching 5.05 billion yuan.
This change is primarily attributed to the removal of anti-dumping duties on Australian wine, leading to explosive growth in Australian wine imports from a low base in recent years. In the first half of 2024, the volume of Australian bottled wine imported into China skyrocketed by over 4,700% YoY, the import value surged by 15,000% YoY, and the average import price increased by 200% YoY. According to the Australian Wine Association, China became Australia's largest wine export market in the first half of 2024.
Importation of wine in containers of ≤ 2 liters
Specifically, for imported wine in containers of ≤ 2 liters, the total volume consistently declined from 2018 to 2023 at a compound annual growth rate (CAGR) of -21.45%. In the first half of 2024, the import volume reached 76.37 million liters, showing a slight increase of 0.29% YoY, while the import value surged by 28.77% YoY to 4.52 billion yuan.
Regarding import sources, the top five sources in 2023 were France, Chile, Spain, Italy, and South Korea. In the first half of 2024, Australia reasserted itself as a strong contender, ranking third, although it has not yet fully returned to its peak status.
Competitive landscape
Old World wine producers such as France, Italy, and Spain continue to maintain significant positions in the Chinese wine market. However, New World countries like Chile, the United States, and South Africa have also been gaining prominence in recent years.
Meanwhile, Chinese domestic wine brands are making strides. The quality of Chinese wines is increasingly aligning with international standards, as demonstrated by numerous awards at global wine competitions. Coupled with rising cultural confidence and the China Chic trend, Chinese domestic wines are drawing increased interest from both consumers and distributors.
For Australian wines, the removal of anti-dumping duties could lead to a significant rebound and infuse vitality into China's wine market. However, given the evolving competitive landscape, Australian wines will face challenges in reaching their former prominence.
Challenges and opportunities
On the one hand, the majority of Chinese consumers have not developed a strong wine-drinking habit. Wine is primarily consumed in formal settings like banquets and gift-giving scenarios. However, in recent years, these occasions have increasingly seen the presence of Chinese baijiu, particularly Moutai, which symbolizes quality and social status. Furthermore, as Gen Z emerges as a significant consumer group, alcoholic beverage choices in social settings are diversifying, with fruit-based flavored alcoholic drinks gaining popularity among young people.
On the other hand, due to economic uncertainty, consumer sentiment has become more rational. For the vast majority of consumers, they emphasize purchasing according to their needs and highlight cost-effectiveness. This is why the retail average price of high-end wines has been decreasing annually, while mid-to-low-end wines have remained relatively stable.
To seek growth in China’s wine market, wine brands need to invest in market education and product innovation. Future market education should target broader audience, with a particular focus on young consumers, utilizing localized storytelling and leveraging influential social media and key opinion leaders to enhance young consumers' awareness and interest in wine. Meanwhile, marketing efforts should be complemented by product innovations that cater to young consumers' preferences, including new flavors, drinking scenarios, and packaging designs.
Regulatory compliance
To export wine products to China, overseas enterprises should comply with Chinese regulations concerning market access and product compliance.
For market access, stakeholders should pay attention to overseas manufacturer registration, exporter and importer filing, inspection and quarantine.
Significant regulations are as follows:
For product compliance, imported wine products must adhere to relevant product standards, food ingredients, and labeling requirements.
Significant regulations are as follows:
GB 2760-2024 National Food Safety Standard Standard for Uses of Food Additives
GB 7718-2011 General Standard for the Labeling of Prepackaged Foods
GB 28050-2011 General Rules for Nutrition Labeling of Prepackaged Foods
If you are interested in more market dynamics and compliance requirements, please contact us via contact@chemlinked.com.
