Saturday, November 26, 2011
The Chinese wine market has massively increased over the last 10 years with imported wines showing the greatest growth. Imports are still small compared to the domestic wine market being at either 85% or 90% depending on whose sets of figures you look at but certainly there is a lot more Chinese wine being drunk than imports. French wine still dominates the imports at about 50% but in-roads are being made with Australian, South African and American wines both North and South. In volume terms we are talking of a market of over 125 million cases with about 12 million cases being imports. That's a lot of wine and even if the French are getting the biggest part of it there is plenty of opportunity for everyone else - and it is growing at about 20% per year. While per capita consumption of wine in China is very low at about a bottle per head this still accounts for about 1.35 billion bottles!
Where does this put New Zealand wine? Well, fortunately for us the majority of the French wine imported (and dare I say it the American and South African wine) is basically crap. New Zealand wine, once tried, will stand head and shoulders above the other offerings and will most likely be on a par or just above the Australian offerings although Australia has an advantage over us in value reds.
The problem is though that the growth has stimulated 'cowboy' operators who all want a piece of the action. It is frontier land out there with the old Westward Ho! mentality being replaced by Eastward Ho!
I work for a wine company that exports to China. Almost everyday we get requests from potential agents and distributors who "have a relative in Beijing, Ningbho, Shanghai etc. who owns a chain of restaurants and wants New Zealand wine". Most of them are chancers and tyre kickers with no understanding of the market and the complexities of exporting. There is a threat if too many of these Chinese Cowboys
get their hands on too many brands. China, whilst a big country with a huge population and many large cities, still needs an orderly and disciplined approach to imports in order to properly manage the growth.
Most of the importers/distributors whether legitimate or dodgy are aware of the super cheap prices of the red wines from Australia, South Africa, France and South America and ask for New Zealand reds at about $5 a bottle. Fortunately, due to our small production we (New Zealand wine producers) are able to refuse to supply at crazy prices and promote on the basis of quality. Lets hope that the emerging big players (ARA, Yealands) and existing big guys (Constellation, Pernod Ricard, Villa Maria and Fosters) don't get a rush of blood to the head and meet Chinese demands for low prices as they have repeatedly done in UK, Australia and USA. We don't have enough feet!