Imported Wine in China – A Review

History of wine in China

Wine production has a long history in China, dating back to the Neolithic Age, almost 5,000 years ago. Not only grape wine, but also the well-known rice wine and meat were made long before the count of time. Although wine became famous in China in the Bronze Age, it almost disappeared during ancient times. A variety of other Chinese beverages, made from millet, rice, sorghum, or plums, replaced grapes. Finally, wine consumption increased again in the Han dynasty (206 BC – 220 AD) and began to become an inherent part of Chinese culture.

Apart from many of the world’s nations where wine often appears for dining, worship, or with the connotation of public decency, the purpose of drinking wine was different in China during early times. Scientists such as Luan Feng, director of the archaeological research center at Shandong University in China, believe that the wine was originally drunk during funerals. This find is based on wine vessels, jars, and pottery from early times, which were found in Central Asia.

Later, the Chinese used the wine as a libation to their ancestors to express reverence, or enjoyed it alone while writing poetry or prose, or to toast family and friends during a party.

During the past centuries the grapes were also planted by the Jesuit priests who needed the wine to celebrate mass. The first winery (Zhangyu Winery) was opened in Yantai in 1892 and is still one of the largest in China. In 1910 he started the Beijing Winery, which first mass-produced wine for use in religious services. After 1949, the government paid much attention to wine. Beijing East Winery was established around 1956. For a deeper understanding of the history of wine in China, it is recommended to read the article written by Pieter Eijkhoff: “Wine in China: Its History and Contemporary Developments”.

Wine market in China today

Viticulture capacities in China are generally good. You can find a wide variety of soils, many different climates, native and imported grapes. China’s major wine regions today include the areas around Beijing, Shanxi, Ningxia, Sichuan, Yantai, Hebei, and Jilin.

Today, China is among the top ten largest markets when it comes to wine consumption. The boom began with the importation of foreign wines during the 1980s and growth in domestic demand is expected to continue. But still, the current consumption of around one liter per capita per year is quite low compared to the main consuming countries (around 30-40 liters per year).

Recently, China’s grape wine appeared more frequently on the shelves of Western supermarkets and specialty stores. As one of the last recognized members in the globalized world of wine, China is gradually gaining a better reputation for its domestically produced and exported products. The most popular Chinese brands are China Great Wall Wine, Dynasty Wine and Changyu Pioneer Wine.

A limited range of wines can be found in all Chinese supermarkets and even in many of the small convenience stores. Most larger restaurants, hotels, and cafes sell it by the bottle, and some high-end establishments also sell it by the glass. The selection of wines, especially imported varieties, is constantly increasing.

Chinese wine consumer preferences

Ever since foreign wines were imported into China, consumers’ tastes began to change. Influenced by French and later other types of imported wine, people began to develop a more subtle sense of taste for wine. Consumer taste matured with diversification through imported wine.

Most Chinese wine drinkers still prefer to consume domestic products. The decision for a particular wine depends first of all on the recommendations of friends or relatives, followed by the origin of the wine. The daily consumption of imported wine hardly exists, so the main reason for buying the most expensive imported wine is still for gifts, parties or a special occasion.

In general, Chinese wine drinkers overwhelmingly prefer red wine and it is historically predominant. But there are also regional differences in the taste and way of drinking wine. Some consumers like to mix the wine with lemon, ice, or soda for a sweeter taste.

Chinese imported wine

France was the first country to export wine to China. With the beginning of the Chinese economic reforms in 1979, they began to create joint ventures with companies in China. Due to the low average income in China, the first attempts to sell foreign wine in China were not very successful. That changed at the turn of the millennium when the economic boom boosted demand for imported wine and more people were able to afford more expensive wines.

Lately, more and more foreign wine companies began to see the huge potential of imported wine in China’s domestic market and followed the French dominance. Still, French wines, mainly Bordeaux, have the largest market share, but other nations are catching up. According to research by Wine Intelligence Vinitrac, the ten most popular wine producing countries among Chinese consumers are France, China, Italy, Australia, Spain, Chile, New Zealand, Portugal, Germany and Argentina.

When it comes to the type of grape imported into China, the most common red grapes are Cabernet Sauvignon, Cabernet Franc, Pinot Noir, and Merlot. Imported white grape varieties include Riesling, Pinot Chardonnay, Semillion, Colombard, and Chenin Blanc.

In 2012, China imported 286 million liters of wine with a total value of USD 798 million. That is an increase of 81% respectively from the previous year. Imported wine accounted for more than 20% of total wine consumption in China, 6 percentage points higher than the 14.7% in 2009 (Data: VINEXPO).

Many global brands face problems selling wine in China as the target group is very diverse and unknown to most foreign companies. Companies must gain a deep understanding of the preferences and buying behaviors of Chinese consumers in order to reach them. Most of the sales channels and strategies must be adapted to the given circumstances in China.

Special Regulations for Wine Importers

No special license is needed to import wine into China. When a company decides that it manages its own customs clearance, its Chinese subsidiary must register as a Foreign Trade Operator after establishment; otherwise, an import agent should always be hired.

Since the food and beverage industry is subject to the strict administration of the Chinese food safety law and other relevant regulations, foreign importers must apply for the food distribution permit at the local Administration for Industry and Commerce (AIC). To sell wine directly to customers, the company must be included in the commercial scope of the Chinese entity’s license.

The labeling of imported wine is subject to strict regulations. The CIQ (China Entry-Exit Inspection and Quarantine Bureau) classifies wine into production batches, each of which requires separate labeling. Wine from a different vintage will be considered a different production lot, regardless of how similar the labeling is.

Import duties and consumption tax on Wine (Wine made from fresh grapes, including fortified wines) are made up of Customs Tariff (14%), VAT (17%) and Consumption Tax (10%). ). Some countries (New Zealand, Chile and Peru) are exempt from customs duties due to their free trade agreement with China.

The future of the Chinese wine market

It is a common opinion that Chinese wine consumption will continue to grow in the future and attract more foreign wine companies. Competition will become more intense and rivalry between wine importers will increase. A VINEXPO study expects China’s total wine consumption to reach 127 million 9-litre cases by 2014. This means a growth of approximately 20% per year.

A brand new report, released by Radobank at VinExpo 2012 in Hong Kong in May 2012, offers insightful forecasts for the Chinese wine market. A summary of the most important perspectives:

• A challenge for wine importers remains to bridge the gap between unknown consumers and the huge demand for imported wine.
• imported rosé wine is up 65% year over year and offers huge growth potential
• Chinese winemakers are restructuring their business and will try to win back market share from foreign wine importers.
• competition among foreign wine importers becomes more aggressive (almost 4,000 companies in 2011, which corresponds to a growth of 200% in the last five years)
• the number of younger and wealthier wine drinkers is growing disproportionately
• brands, as a guide to purchase, will be even more important for the Chinese wine buyer in the future