Wine and Spring Rolls: A Look at the Chinese Wine Market
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The days of Chinese Calimochos (from the Basque Kalimotxo, a drink consisting of approximately 50% red wine and 50% cola-based soft drink), with buckets of Chateau Lafitte mixed with Coke and shots of Cabernet Sauvignon, might come to an end earlier than expected.
Wine Tasting in China
The increasing number of wine tasting events and shows in minor Chinese cities, such as Kunming, Chengdu and Tianjin, is a sign of how fast culture and knowledge of wine is spreading among Chinese consumers. It is not a secret that the Chinese market promises to become the source of consistent profits for foreign wine exporters and brokers, given the expectation that mainland China is poised to become the sixth largest wine consumer in the world. While world wine consumption per capita is at its lowest in four decades, due in part to the European market saturation, the Chinese market is only in its early stages, with wine representing just 1.5% of total alcoholic beverage consumption.
- Demand for imported wine is increasing 30% a year.
- Currently annual consumption per capita is around 0.51 liters, but only a tiny fraction of the population drinks wine.
- Demand for foreign wine is increasing spectacularly thanks to wine tasting exhibitions and word of mouth.
Nonetheless, domestic wine production is already outstripped by the demand. The top four Chinese market producers, namely Changyu, Great Wall, Tonghua and Dynasty, dominate the market, often mixing low quality Chinese wine with foreign surplus bulk wine, which they sell at lower prices compared to imported bottled wine. The main consumers of domestic wines are middle class Chinese, who lack an extensive understanding of wine tasting, drinking and culture.
When I say wine, I mean red wine, or Hong Putaojiu, which represents about 94% of the wine drunk in China. The favor extended to red wine can be attributed to a number of reasons, though mainly it is because the color red is a traditional symbol of good luck, happiness and prosperity.
In addition, it relates a strong, prestigious image to the bottle, as well as the glass filled with wine. In fact, China's consumption of red wine is mostly driven by a desire to show social status and prestige at business events, or when offered as gifts, rather than by an acquired taste for it, though this tendency appears to be changing very fast as part of the process of the westernization of Chinese culture in general. The eagerness to demonstrate how well one is adopting the perceived intellectual and poetic life style of the western world, is driving the demand of China's middle and upper classes for celebrated, expensive foreign brand wines, as the new disposable income leads many to installing wine racks and cellars in their homes. Wine brokers from all over the world should take this as a clear message that now is the time to dive into the Chinese wine market.
Wine Tasting in China
Prestige and image in China are not straightforward concepts as they are in the western world. The understanding of the traditional interrelationship of guanxi, mianzi and renqing, respectively 'personal connections', 'prestige' and 'favors' in English, is a crucial key to a successful foreign business relation in China. Western entrepreneurs must understand the driving forces behind the Chinese wine culture, in order to effectively break into it. In addition to overcoming sky-high import taxes, legal requirements and culture gap, western wine sellers must be prepared to also adapt their traditional wine drinking techniques to accommodate the less experienced Chinese wine drinker. In order to build up a good distribution network and a positive image among Chinese business men, the western wine dealer must be prepared to uncork the finest vintage wines, toast with a sound Ganbei! then drink the entire contents of the glass at once. The education to wine tasting must come later.
Wine Appreciation Class
Currently, in China most of the wine is drunk at business meetings and social gatherings, rather than being used in the privacy of the Chinese home. The main reason for this is the traditional culture of drinking beer and baijiu, a potent traditional distilled alcohol, in fact, many Chinese choose to drink a cup of baijiu or a beer at dinner, rather than uncorking a fine bottle of hong putajiu.
A Chinese Wine Store
Little by little this habit is being undermined by well-thoughtout promotions, marketing and advertising, which portray hong putaojiu as a refined, healthy drink for more educated, sophisticated palates. Another positive factor for the diffusion of wine culture in China is its adaptability in pairing with many dishes of the traditional Chinese cuisine, and the increasing willingness of Chinese consumers to replace traditional drinks such as tea with less traditional options. However, western wine producers must take into consideration the characteristics of Szechuan spicy food, the even hotter Hunan cuisine, the Cantonese Dim Sum and the rich, complicated flavors of the Zhejiang cooking, just to name a few of the diverse Chinese gastronomical offerings.
Inauguration of a New Chinese Wine Store
- Active import duties for bottles are around 48.2% and 56% for bulk wine.
- Labels must contain Chinese translation.
- Two bottles for each label are are inspected by the CIQ.
Interestingly enough, the largest wine consumer region in China is Guangzhou, which has a smaller expatriate community and fewer visiting tourists when compared to Beijing and Shanghai. The Cantonese city has long been importing wine through Shanghai, which has lower import duties, however, with the recent opening of the Wine Trading Center in Guangzhou, now it will be easier and cheaper to export directly to the Guangdong province. It is not a secret though, that many exporters have fought the high import taxes by declaring different products and lower costs on import paperwork.
Despite the enormous growth in the development of the Chinese wine palate and the official opening of the Chinese market, as reflected by the reduced import duties and the simplification of regulations compared to just a few years ago, the time of Chinese Calimochos are not over yet.
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