Like anything else, demand, user trends and habits always play an integral part in what we can expect by strength in consumer goods and services, and the wine industry is no different.
If you’ve even partially been paying attention to recent wine industry coverage, you’ve probably heard more than your share of news and information on the spurts and growth of the Chinese wine market, but in listening to all of this coverage, have you thought about how this could change the wine industry as a whole, over the next five years? With the removal of import duty on wines incoming to China, 2011 saw US wine exports to the country increase by 39 percent, and Italy too, for example, reported a wine export increase of 80 percent to China. This boom and exploration of a practically new wine market could have some implications for a long time wine drinker, with a basic budget. According to a recent report, covered on Reuters, by 2016 global wine consumption will reach 34.5 billion bottles, up 5.3 percent from 2012, and largely driven by a 40 percent jump in sales, in China. Moreover, with China forecasted to be the second largest wine consuming country, when looking at value, simple economics raises the flag that our price-points and inventory could be effected, as western wine consumers. Though it is clear that items are priced according to market implications, the dangling carrot of a market willing to pay extreme amounts for wines, could effect the wines made available to markets where wine spending is moderate, but yet by no means remedial?
Many of us are looking at how the wine boom in Asia will affect the existing long time consuming markets. As other industries that once celebrated smashing demand from China for their products are now experiencing a cooling off, resulting in the loss of jobs, you can’t help but ask if this what our wine markets have to look forward to.
It’s difficult to know all of the answers, but the tremendous change in China’s wine consumption and its effect on wine producing markets will continue to be an ever-changing story, with the ending yet to be told.
The graph below, from live-ex, shows how the financial wellness of the Chinese economy effects wine consumption. Though a remedial notion, it is the same effect previous high-demand exports are severely suffering from now.