Food & Wine Thursdays: Much Ado About the Chinese Wine Market

A fairly interesting and detailed overview and analysis of the Chinese wine market from the Knowledge@Wharton website was circulating on Twitter the other day. It reached some interesting conclusions and reaffirmed much of my understanding of the Chinese wine market.

The fact is, most of us in the wine business don’t need to give a rat’s ass about the Chinese wine market, at least for the next decade.

Why’s that?

Basically, the Chinese wine market is where the US wine market was in the 1960s. Some wealthy elite purchase and consume prestigious labels (largely from France), another swath of the population consumes largely inexpensive domestic wine, while the majority of the country still drinks beer and whiskey. The Chinese palate is immature and the driving force behind high-value wine sales is the prestige and perceived quality of the brand, not the inherent qualities of the wine.

Now, the world is not where the world was in 1960, which means it probably won’t take China 50 years to become the American wine market of 2012, but it’s still going to take a while. This means that, unless you’re in the Bordeaux, Burgundy or Napa Valley wine business, the only reason you should get into the Chinese wine market is if you want to invest in domestic Chinese wine production, which still accounts for 80% of domestic Chinese wine consumption. Of course, three Chinese brands make up over half of that number (remind you have Carlo Rossi, Paul Masson and E&J Gallo in the 1970s, anyone?).

In discussions of the Chinese wine market it is often conflated with the Hong Kong wine market which, although the primary gateway for the Chinese high-end wine buyer, is an older and more established and is not indicative of the Chinese market as a whole with its hundreds of millions of potential wine buyers across a broad economic spectrum.

And a final thought on the article: sure, China might be “the savior of Bordeaux,” but do we remember why Bordeaux needs saving? Its inordinately high prices, relative lack of distinctive terroir and the perception that there is nothing inherently special about Bordeaux over any innumerable other wine regions have meant that buyers in developed wine markets have turned their backs on Bordeaux in favor of other regions whose wines overperform for the price. China’s embrace of Bordeaux isn’t indicative of a maturing wine market, its indicative of a nascent one, only a few days out of the womb.

About David D.

I'm a wine professional. Like a real one who makes most of his living in wine and have for most of my adult life. I also write, but you can see that.
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