A Glimpse of China's Wine Regions: Ambitions and Challenges

A popular saying goes in China’s wine sector: a fine wine is planted. This saying at least supports the following information: (1) Premium wine grapes are a guarantee to produce a fine wine; (2) A fine wine is tainted with the distinctive flavor of its specific hometown. Just as succinct words can suffice rich meaning, the saying “a fine wine is planted” is a slogan for many winemakers to highlight their wines’ features. In essence, marketers’ messages to their targeted consumers lie in wine regions’ natural ecology and cultural implication. With long-term cultivation and maturing of the wine market, wine regions all over China have made considerable progress and faced many challenges while exploring the global market. 

Rapid growth of wine regions in Eastern and Western China. Before 2002, wine regions in China had the following features: (1) Wine regions in Eastern China provinces like Shandong, Tianjin and Hebei are home to diverse renowned wine brands and favorable market effects have taken shape there; (2) In wine regions in Western China like Xinjiang, Ningxia and Gansu, most winemakers supply bulk wine for brand enterprises in the east or provide processing services (OEM, bottling). Since 2002, China’s wine market has witnessed rapid growth. On the other hand, the industry has shifted for middle- and high-end wines. In the midst, a lot of brand enterprises in the east have set up factories in the west to pursue premium wine grapes. This move greatly drives the growth of wine regions in the west. For example, Changyu has invested 3 chateaus in Shaanxi, Xinjiang and Ningxia; the COFCO has invested Yunmo Chateau and Tianlu Chateau in Xinjiang and Ningxia. Meanwhile, native winemakers in the west have devoted more attention to publicity and marketing, and brought about their signature brands like Mogao, Grace Vineyard, Xiangdu, Zixuan, Hansen and Rongzi. A legion of native chateaus, to be noted in particular, emerges in the market thanks to their distinctive traits and government backing, including Hedong Manor, Tiansai Vineyards and Chateau Helan Qingxue. They are promising newcomers in western wine regions. In addition, overseas winemakers like LVMH Moët Hennessy Louis Vuitton SA initiated to invest in Western China. Driven by many well-established enterprises at home and abroad, wine regions in Eastern and Western China have made much progress in 2014. The layout of “brands from the east and bulk wines from the west” has been broken down to some extent. There a landscape of many promising wine regions is emerging. Currently, the growth on both sides can basically meet the demand for premium wine grapes. Development in wine regions will rapidly grow with the expanding market.

Traits of wine regions are in the making with mounting challenges. Distinctive wines come along with natural conditions of different wine regions, harvests in different years and diversified experience and techniques of winemakers. Therefore, wines from different parts of the world cannot be standardized, representing a rich and diversified wine world. More and more people are enticed into China’s wine market. They come to understand and discern wines. All the factors urge the authorities, trade associations and entrepreneurs in wine regions in Eastern and Western China to focus on the development of wine regions and distinctive wines. Remarkable achievements have been made in selecting wine grapes and developing distinctive wines, but further development may be constrained by the following factors: (1) Increasingly more overseas brands have entered the Chinese market and have won consumers’ recognition with high cost performance. This trend urges numerous Chinese wine producers to sell imported bottled wines as one of their businesses, including Changyu, Great Wall, Dynasty and Grand Dragon. This move will slow down the making of traits of China’s wine regions. (2) Wines are overproduced in the international market. Leading wine-producing countries are seizing opportunities to enter emerging markets like China, Russia and India. For wine dealers in China, cost performance is the most important factor that to consider when importing bottled wines or bulk wines. If the cost of producing one bottle or 1,000 liters of wine keeps rising, more and more producers and dealers would procure wines from the global market rather than invest in and develop China’s wine regions. That might dampen the making of traits of China’s wine regions. Therefore, the guidance and support of industry policies are indispensible to responding to this challenge.

 -Tang Wenlong-