China is rapidly conquering the world’s wine market. According to the report of the international analytical agency International Wine & Spirit Research (IWSR), within three years China will be number two worldwide in wine sales, behind the US. There are several reasons and consequences for this, according to RT Channel.
Wine consumption in China is growing rapidly. The IWSR predicts that by 2020 the Chinese wine market will be second only to the US, but ahead of the current leaders, UK and France. “The Chinese middle class is growing, and with it the demand for quality foreign wine. According to Wang Zuming, director of the China Alcoholic Beverages Association, “in the first half of 2017, China bought 254 million hectoliters of wine for a total amount of US$1.146 billion or 13.9% in terms of quantity and 3.34% in terms of quality compared to the same period of last year. In the next three years, we will undeniably be number two in the world wine market.”
Besides wine sales and consumption, capital Beijing could top the list in the area of vineyard size, ie double the size of the current leader Spain. Currently, Beijing is the largest importer of red wine and the sixth largest consumer of wine produced in the world (17.3 million hectoliters). According to experts, with a population of 1.379 billion people, China’s potential is immense. Within three years, sales in the country are expected to reach 6.1 billion hectoliters per year.
One of the reasons for the break-neck speed of wine trade in China is the consumer preferences of the Chinese population, which exert considerable influence on the global wine market. To date, France holds 42.6% of the Chinese wine market, 10.2% less than last year. On the other hand, Australian and Chilean wines appreciated by the Chinese show a stable increase, ie 25.1% and 10.5% of the market, respectively. The activity of Australia and Chile is due to the signing with China of free trade treaties. According to Tim Hunt of Rabobank’s Agriculture and Food Department, “For five years Australian wine imports into China have been growing by 10% a year. Of course, the future of Australia’s wine exports lies in the hands of China.”
Increasing demand in Asia positively impacts the overall situation in the wine industry. Economist, journalist, and wine market expert Mike Veseth aptly stated that “Over the last 50 years, wine consumption in the Old Continent has been considerably reduced, while rising demand in North America and Asia offsets these negative trends. Today, the global wine market is finally in equilibrium after a long period of excess supply and insufficient demand.”
Only the United States will post higher wine imports than China over the next three years. At the beginning of the 90s, the American market was already in the sixth position, but in 2016 it rose at the top. According to IWSR and Vinexpo experts, wine retailing in the US will increase by 11% (up to $ 38.6 billion) by 2020, double that of its closest competitor, the UK. In the UK, the high demand for sparkling wine will be leveled by the loss of interest in still wines. This is especially true with Brexit, which is currently a market sensitive to changes and uncertainty, thus will be threatened by rising prices.
Apart from Imports
In addition to growing demand, China is boosting the production of its own wine. As of now, according to the IWSR report, the country ranks fifth in the wine country rankings.
In addition, China is the second country behind Spain in terms of area of vineyards (847,000 ha), and ahead of France (785,000 ha). According to experts, since the Chinese government is actively creating the bases of the national wine industry, China could even surpass Spain in five years.
The Climatic Difficulties
As a consequence, however, the climate dictates new rules to winemakers. The Australian newspaper Australian Sun has published the results of a study indicating that climate change could harm territories where grapes are traditionally grown. This could affect primarily France, southern Italy, Spain and northern Argentina.
Professor John Holdren, an environmental specialist, said during the Vinexpo Bordeaux conference that by 2050, the territories that can be used to grow vines will be reduced by 23%. Even today, the land allocated for vineyards continues to grow only in China and New Zealand, while European vineyards are shrinking (down 26,000 ha from 2014).
Between 2012 and 2016 alone, the traditional wine regions of Burgundy and Piedmont (homeland of Barolo wine) have lost almost 50% of harvests due to frost and hail, and this year exports from Argentina have fallen by 18 million liters. Brazilian wine production fell by 55% due to the strengthening of the El Nino current.
Mike Veseth explained that “Of course, climate change is the number one enemy of winemakers, and producers are forced to adapt to it. English wine is a good example of adaptation. Global warming has reduced the quality of champagne produced in France, but at the same time, it has opened the door for British sparkling wine producers. But, undeniably, if the climate continues to change, wine production in the world will shrink significantly.”