How China Became the Wine World’s Most Unlikely Superpower

Don't worry, this doesn't mean China wants to drink all your wine

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Start panicking. The global shortfall in wine is imminent. Or so it goes if you’ve been reading Morgan Stanley’s October report into the global wine industry, which suggests that the world is currently facing the deepest wine shortfall in nearly half a century as demand outstrips supply.

Experts over at the International Organization of Vine and Wine tell us however that there’s no need to start hoarding: world wine production this year has been exceptional, reaching seven-year highs, and consumption is beginning to stabilize. The real curiosity to take away from Morgan Stanley’s report is China’s ongoing and insatiable thirst for wine—the shortfall in supply is partly down to the fact that the superpower’s consumption of wine has doubled twice in the last five years, outstripping even U.S. demand. In fact China’s love of wine is growing at such a rate that it is expected to become the world’s largest consumer of wine by 2016.

Mike Veseth, editor of the blog Wine Economist and author of Wine Wars, tells TIME he’s already received emails from “people worried they need to stock up on wine, because the Chinese are going to drink it all. I don’t think that’s going to happen.” The country’s love of wine is not new, but what is is its emergence as a wine superpower, says Veseth. China’s increasingly wealthy classes and its growing demand for western luxury items have the power to significantly influence an industry, impacting supply and in turn prices for the rest of us. Underpinning this is an element of what Veseth calls “China Syndrome” in his blog. It’s “both the dream that China will buy all the goods we try to sell her and the fear that she will return the favor and take over our markets.”

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Unless you are in the market for super-premium or collectible bottles, where Chinese investors do dominate says Veseth, there isn’t actually much to fear from China. That isn’t to say it’s not becoming a force to be reckoned with in the wine world—quite a jump for a nation whose per capita consumption of wine is significantly below global levels and where it’s still not unusual to have your red wine served with soda.

China’s place as an emerging superpower is cemented by the fact that it has the domestic demand, land, money and interest from global winemakers in its market. Veseth says the Chinese “are on everybody’s radar, either as an investment or as a market for exports.” And while the numbers of vineyards and plantations are dropping from France to Argentina, China has been increasing its wine-growing surface area—it currently has more vineyard hectares than the U.S. Accompanying this is a growing number of wineries and chateaux popping up across its wine growing areas in places such as the Ningxia region—including resorts with street signs shaped like wine bottles.

But China’s growing reputation as a wine superpower has not been without controversy. French anti-money laundering authorities, Tracfin, raised the alarm earlier this summer over acquisitions of vineyards by Chinese and Russian investors. Its suspicions were linked to reports of large flows of illicit money leaving both China and Russia and foreign investors purchasing vineyards through multiple holding companies. Buying a vineyard happens to be a useful way to launder money as paying in cash is not unusual and the price of wine is never fixed. FT writer Anne-Sylvaine Chassany also notes a touch of animosity from some French producers, given that families have long run the industry, to outsiders seeking large wine estates.

Despite this the French, like other wine producers, are more interested in looking at ways to cater to Chinese demand. China is the world’s biggest importer of Bordeaux wines, and thanks to this demand, total exports of French wine reached record levels of $7.7 billion last year. Though China will be seeking to import wine to cover its consumption in the coming years, Veseth believes eventually the “majority of wine China will drink in the long run will be made in China.” Meaning that the real difficulty for wine lovers in the future could be in getting the chance to taste a bottle of Chinese red.

5 comments
Best_Coast_Wines
Best_Coast_Wines

The good news is, there is plenty of great wine in California, France and elsewhere to feed this Chinese thirst for wines.  


My company, Best Coast Wines, specializes in exporting California wines to China, and we have seen a strong uptick of interest in the China market.  Anecdotally, we are also seeing growth throughout the rest of Southeast Asia.  These countries are starting off of lower base levels (China is huge after all), but we expect a significant percentage of business to come from Thailand, Vietnam, and India by mid-2015. 


- Nick from Best Coast Wines

queenofromania
queenofromania

When I lived in China, I came across a wine bottled by Great Wall vineyards called 'Enduring Pulchritude'. If the quality of their wines ever matches their ability to provide catchy names for them, then the world will need to watch out.

SharongeGe
SharongeGe

my friend's mom makes $62 every hour on the internet. She has been unemployed for 8 months but last month her check was $13696 just working on the internet for a few hours. ......>>>>>>>>>>  www.jobs60.ℂom

Hungarowines
Hungarowines

@Best_Coast_Wines  

Hi  Nick can u please send me your email address, would like to get in contact with you regarding wine. Thanks a lot Adrian from Slovakia-EU. Mine is: safetec(dot)sk@gmail(dot)com