The winemakers of China
When you think of wine, the same places always come to mind. France, Italy and Spain are the favourites of those who prefer ‘old world’ wines, whereas places like Australia, California or South Africa might be preferred by fans of ‘new world’ wines.
Every now and again an upstart nation will attempt to assert itself in the wine world and shake the boat. For reference, see the often-pitiful attempts of British winemakers to gain the respect of an industry which has no interest in them. These challengers tend to fade away as quickly as they come.
However, one country which is making more serious looking inroads is China. The country’s taste for wine has been growing rapidly in recent years and it is now the fifth largest consumer of wine in the world. Between 2010 and 2015, the volume of wine consumed by the Chinese increased by 132% to a total of 2,466 million litres. This figure is expected to reach 4,320 million litres by the end of 2019. It is also the sixth largest wine producer in the world, bottling 11.4 million hectolitres in 2016.
Partnerships between Chinese wine-producing regions like Shandong and Ningxia and French producers, wine scientists and farmers are creating a new frontier in the wine world. Chinese consumers have a real taste for French wine, meaning that any local producers looking to break into the market had a high bar to jump – so why not partner up with the professionals to create a superior product?
The French producers will benefit from this arrangement too. As previously mentioned, the Chinese market for French wine is already enormous, and by partnering with local developers the profile of the French product will only grow even further.
Investment from western wine producers in China is an interesting case. Normally, companies go to China to take advantage of cheap materials and labour – but that isn’t really possible when it comes to wine making. The method of production and the basic costs are the same everywhere. In the case of wine, it appears western organisations are more interested in getting in on the ground floor and promoting a local product which they have a financial stake in. Who knows, Chinese wine may begin flowing in the opposite direction and making money in the west as well.
China exported approximately US$1.2m in 2016, compared to total exports of US$3.2bn from France – however, this is clearly a growing market. It is unlikely that China will ever challenge the dominance of France and Italy, but there is a lot of room for manoeuvre if investors are willing to take a risk and give the Chinese a chance.