Three New Trends Shaping Chinese Wine Industry

After a decade of rapid growth, the Chinese wine industry is now under a period of profound transition starting from 2012: on one hand, the ban against luxurious liquor in official entertainment constrains the Chinese luxurious wine market; on the other hand, in response to such market change winemakers and wine merchants adjust their business strategies and start to invest more in the middle-end market (i.e. individual and household consumption). However, the Chinese wine industry never slows down its pace of international involvement. Under this context, the Chinese wine industry now sees the following three new trends:

Consumers more mature, with individual consumption on the rise. A mature wine market should be supported by the habitual consumption from individuals and households who pursue a healthy, fashionable and leisure life. Efforts of consumer education since the 1990s have paid off, and nowadays wine appears at the dinner tables of more and more Chinese families. Chinese wine consumers become more mature, and their attitude is influencing the whole consumer market to shift from luxury consumption to middle-class wine. Of course, luxurious wine will not disappear on the Chinese market, but will be consumed more sensibly, e.g., for purposes of appreciation, collection, or investment. In future, the market value of wine, as a single category of alcohol, will continue to grow, and the constantly increasing individual consumers will be a decisive driving force to such growth. 

Market segmentation and product diversification. The Chinese wine market has long been taken up by different consumer groups including official consumers, fashion consumers, gift consumers, professional consumers and incidental consumers. With enhanced cultural awareness and improved quality of life, consumers learn about the characteristics of different wine products around the world, and pay more attention to the match between wine and food, the cost performance of a wine product, and the selection of wine on different occasions. Such diversified consumer demands push winemakers and wine merchants to provide more diversified products. It can be said that Chinese wine market has been divided into several market segments, each with its own target consumers. This is a brand new opportunity as well as a critical challenge for winemakers and wine merchants from all over the world. 

Industrial clusters to achieve synergy. Wine products of a particular region usually have their own distinctions due to unique climatic factors. Therefore, winemakers should grow native varieties of grapes, and make wines with local characteristics. For Chinese winemakers, the most vulnerable link among the whole value chain is raw materials, i.e., wine grapes. In an era of global competition, winemakers have to rethink about this weakness. Fortunately, Chinese major winemakers have reached a consensus that the industrial cluster is a good solution to this issue, and stakeholders have also realized that industrial cluster is an inevitable trend to achieve better synergy. In future, collaborative innovation within and between industrial clusters will become common practice, and industrial leaders will play an important role during the course. Therefore, the Chinese wine industry (including appropriate authorities, trade associations, winemakers and wine merchants) will cooperate with its foreign counterparts more openly, flexibly, extensively and intensively in terms of technical exchange, product research, consumer education and market development. It can be expected that across-boundary collaborative innovation between Chinese and foreign industrial clusters will be more frequently seen.

- TANG Wenlong -