China’s love affair with wine, and how SA can benefit

Thursday, 24 August, 2017
Farmer's Weekly
Chinese consumers’ growing affinity for wine, particularly imports from international premium wine producers, presents a growth opportunity for the South African wine industry, according to research conducted by Buyambo Mantashe of agriculture investment company, MM Agrivestment.

An increase in the number of high and middle income earners in China has fuelled the desire for ‘exclusivity’. This trend has been dubbed the ‘premiumisation of Chinese consumerism’ - the increasing demand for products that are expensive and fashionable.

This has included an increase in the consumption of wine, which is relatively new to this market.

In 2015, China’s per capita annual consumption of wine was estimated at 1,2ℓ, which is relatively low compared with Portugal’s estimated 42,6ℓ per capita, the highest in the world.

Despite being in its infancy, the Chinese wine market is experiencing dramatic growth, with wine drinkers having increased from 38 million in 2014 to 48 million in 2016.

In the first three-quarters of 2016, China imported bottled wine to the value of US$1,66 billion (about R220 billion), which was 93,4% of the country’s total wine imports. This represented a 19,1% year-on-year increase. Based on this growth, it is predicted that China will become the second-largest consumer of wine after the US by 2020.

Chinese wine market
The Chinese wine market is currently defined by two segments: the low-priced market, which is led by Chinese wine producers, and the high-priced market, which is largely the preserve of international premium wine producers.

China’s import market, in turn, is dominated by French wine, which has a 40% market share. Other top performers are Australia, Chile, Spain, Italy and the US.

SA market share
Globally, South African wine competes in the mid-priced market. As the world’s eighth-largest producer, South Africa has a comparatively small presence in China at only 2% in 2015. South Africa ranked seventh among international exporters, with a volume of nine million litres at a value of R460 million.

This is in comparison with France, which exported 191 million litres to China at a value of US$965 million (R12,7 billion) and the second-largest exporter, Australia, which exported 79 million litres to China at a value of US$542 million (R7,1 billion).

Chile, which was South Africa’s strongest competitor in terms of unit price, was the third-largest exporter of wine to China, exporting 60 million litres at a value of US$209 million (R2,7 billion). The average unit price of Chile’s wine exports to China was US$3,48/ℓ (R45,84/ℓ), compared with South Africa at US$3,62/ℓ (R47,68/ℓ).

The highest unit price was for Australian wine at US$6,83/ℓ (R89,97/ ℓ), and the lowest was for Spanish wine at US$1,97/ℓ (R25,95/ℓ).

Between 2011 and 2015, Australia (30,7%) and Chile (28,3%) achieved the highest growth rates in the Chinese market, with South Africa in third place at a rate of 24,7%. In 2016, China became South Africa’s sixth-largest export destination, accounting for 5,44% of total packaged wine exports.

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Thomas Davidson

Thomas joined wine.co.za in May 2019 after graduating from Stellenbosch University with a BA in History & Ancient Cultures and completing a certificate in Business Management and Entrepreneurship at the Graduate School in Stellenbosch. He moonlights as a radio presenter at MFM - and has an incredible passion for wine. 
We are delighted to have him on the team.