China wine imports could be 50% of market

Chinese wine drinkers are showing a strong and growing preference for imported brands, with analysts saying they could grow to achieve 50% of the country’s wine market.

Recently released figures from China’s customs authorities show that the country imported 200 million litres of wine in the first six months of 2012, a rise of 12% over the previous year. The half year imports had a value of £1.1 billion, a rise of 24.1%.

Speaking to the China Daily newspaper, Zhang Zhigang, an analyst at Rising Securities, said that China’s domestic wineries face challenges from foreign wine brands in terms of both price and distribution. He said: “Given Chinese consumers’ relative lack of awareness of foreign brands, their profit margins can be a lot higher than local brands”. He predicted that “imported brands will eventually account for around half of the Chinese market”.

Domestic brands in China currently account for some 75% of the market, but are most visible at the lower price points. Some of China’s largest wineries have faced multiple challenges in recent months, with declining revenues and quality concerns. In recent days, wines from three companies were found to contain low levels of pesticide residue, including Changyu Group. Changyu’s share price fell sharply on the news, but the company reassured customers that the pesticide levels found were well below EU limits and not harmful to health.