The paradigm of China’s wine market is about to shift says the country’s biggest and oldest wine producer, Changyu Pioneers, as it predicts consumers’ years of “blind idolisation” for imported wine is about to come to a full stop.
The consumer mentality that anything imported is better than domestically produced goods has created what Sun Jian – general manager of Changyu Pioneers, China’s biggest winery with vineyard holdings across seven of China’s wine regions – calls a market awash with “garbage-like imported wines.”
Expanding on the subject, Sun elaborated: “First, it has to do with Chinese consumer’s blind idolisation of imported wines, believing that any imported wine is good wine. But with the influx, there’s a good mix of shoddy wines. According to Chinese Customs, we have about 6,000 wine importers in the country, so you can imagine how big, complex and consequently mixed the market is.
“This is not to say there aren’t great wines, but a good portion of substandard wines are imported in, slapped with a flashy label to appeal consumers who don’t have much knowledge about wine,” he continued.
The majority of these ‘shoddy’ imported wines are what are known as ‘OEM’ wines (otherwise known as private label or buyer’s own brands), bulk imported cheap wines ordered and created specifically at the request of Chinese importers and distributors. “Oftentimes, a Chinese distributor would find an overseas winery, register a brand in China, and ship the wines back to the country to make it look like it’s theirs,” Sun explained.
“But which winery would sell you their best wines for your OEM wines? Their best wines are reserved for themselves,” he added. “Once these one-euro wine arrive, they are bottled with a nice label, placed in a beautiful case, then sell for a hefty price. But it is deceiving consumers, and this kind of business has no future.”
At the moment, imported wines are estimated to take up about 30% of China’s wine market, with the majority still being Chinese wines, led by renowned domestic brands such as Changyu and Great Wall, the latter owned by China’s foodstuffs conglomerate COFCO. The growth of imported wines has outstripped domestic wines, and the country is projected to become the world’s second biggest wine consumer by 2021 based on a report by Vinexpo and IWSR.
“2018 is going to be a turning point,” asserted Sun, basing his prediction on the fact that consumers over the years have learned their lesson about OEM wines, and the marked progress Chinese wineries have made over the years.
If 10 years ago consumers would turn their noses up at Chinese wines, today the wines can stand toe to toe with other competently produced commercial wines from around the world.
Domestic wineries, be it boutique producers in Ningxia or larger-scale producers such as Changyu, are in a concerted effort to engineer the country’s reputation from a large wine consumer to a reputable wine producer.
Praising many boutique wineries in Ningxia and Xinjiang in northwestern China that have impressed domestic and international audiences, Sun added that it also has Changyu Moser XI winery in Ningxia, where 75% of its production is exported overseas to 14 countries. In addition to Ningxia, Changyu has vineyards in its home base of Shandong province, as well as Xinjiang, Liaoning, Beijing, Hebei and Shaanxi provinces.
As for grape the varieties cultivated, Cabernet Gernischt, genetically identical to Carménère, has been a grape that Changyu has sung the praises of since the founding of the winery in 1892. Used in its flagship wine ‘Noble Dragon’, it is a grape, according to Sun, that has survived and flourished in Shandong out of the 120 or so varieties that its founder Chang Bishi brought into China in late 19th century.
On the other hand, the winery is also mindful of consumer demand for good value imported wines, which had spurred Changyu to purchase wineries in France, Spain, Chile and most recently Australia. In the coming years, the company plans to increase its imported wine arm to account for 30% of its overall business, Sun revealed.
“In terms of imported wine, we have basically laid out a well-placed strategy of overseas acquisition,” Sun commented, adding that the winery is going to streamline some of the brands from its acquired wineries and bring in only “good value” and “well branded” products to the mainland market.
“We are not going to sell low-end and garbage-like imported wine,” Sun concluded.
30th April, 2018 by Natalie Wang Drinks Business