Who Consume Wine in China?

The period between 2001 and 2011 has seen substantial growth in the Chinese grape wine market. This “Golden Decade” features steadily growing market size, dramatically increasing sales and sharply rising customer numbers, especially of mid- and high-end consumers. All these suggest a brand new chapter for the whole Chinese wine industry.

Let's find out more about Chinese wine consumers. Generally, the Chinese wine market is made up by the following 7 consumer groups: (1) government and corporate customers; (2) foreigners living in China and well-paid white collar (mid- and high-end group); (3) trendy young people; (4) people who buy wine as a gift; (5) regular wine drinkers; (6) wine connoisseurs and wine tasters; and (7) other occasional buyers. Although the first group (government and corporate customers) drops in number due to policy restrictions, all other groups are growing constantly.

Here is another map of Chinese wine consumers by buying motive: (1) health-conscious consumers; (2) fashion-conscious consumers; (3) professional consumers; (4) gift buyers; and (5) occasional consumers.

Below are three characteristics of changing consumer buying behaviors in China today:

Consumers are more receptive to products from different countries and regions. Currently, almost all major wine brands worldwide are competing in the Chinese market. French, Australian, Spanish and Chilean wines perform extremely well in this fierce competition. Besides, the Chinese government has signed free trade agreements with Chile, New Zealand and several other countries, and such agreements involve reducing and even phasing out import tariffs on wine. It is believed that the upcoming Free Trade Agreement between China and Australia will further boost Australian wine sales in China. A more open market offering diversified choices generates strong consumer buying interest.

O2O makes new shopping experience possible for more ordinary consumers. E-commerce has been a new and emerging marketing channel for Chinese wine business since 2008. There are traditional wineries' websites selling homemade wine, as well as third-party funded vertical e-commerce platforms promoting imported products. Zhangyu, COFCO and Grace Vineyard have also launched official flagship stores at third-party comprehensive or vertical e-commerce platforms. This online order, offline delivery approach brings great convenience and fresh experience to a larger number of consumers.

Consumers become much wiser in making buying decisions. Easy access to global wine brands, coupled with the thriving O2O commerce, helps Chinese wine consumers to make better informed decisions about how to choose best products at best price. In this consumer age, both local and foreign wineries strive for continued improvement in product quality and product features, and compete fiercely on branding, marketing and pricing. Traditional dealers, distributors and emerging e-commerce platforms also fight bitterly for market share and customers with prices and services. This is good news for consumers, who can buy more cheaply, healthily and wisely.

Wine is more and more frequently seen at social, commercial, political, dating, recreational and other public and private events in China. Despite slowdown since 2012, the Chinese wine industry remains solid and expects stronger consumer figures in the coming future, with higher share in total alcohol sales. But of course, market players will face harsher competition than ever before.

-TANG Wenlong-