China’s Wine Market
Market Intelligence on China’s Agriculture & Food Industry
Chinese grape wine production and consumption has a long history, dating as far back as the late Neolithic Era over 4,600 years ago. China’s modern wine industry traces its roots back much later, when the savvy businessman and famed diplomat, Zhang Bishi, founded the ChangYu Pioneer Wine Company in 1892. Zhang Bishi choose an idyllic patch of earth to plant his first vineyard; Shandong province, the very same region where Chinese wine production first took hold many thousands of years ago. He imported approximately 120 grape varieties from Europe and the United States, with Cabernet Gernischt (aka Cabernet Shelongzhu or Cabernet snake pearl), emerging as the dominant variety. Cabernet Gernischt, a distant relative of Cabernet Franc, is an orphaned grape variety that was likely wiped out during a phylloxera outbreak that spread across Europe during the late 19th century.
ChangYu Pioneer vineyards, along with the majority of those in China, struggled financially after the fall of Qing dynasty in 1912. The establishment of the People’s Republic of China in 1949 further crippled the industry as the Maoist government viewed wine as non-traditional and bourgeois. During the 1980s, wine rose in popularity and foreign investment, particularly from France, began to trickle into the country. In the 1990s, backed by the population’s rising disposable income, regional government agencies and industry stakeholders began to ramp up production through various vineyard development projects. Today, China is home to a multitude of wine cultivars, including well known varieties of Cabernet Sauvignon, Merlot, Pinot Noir, Chardonnay, as well as local wild varieties and Cabernet Gernischt. The country’s wine market is maturing and consumer tastes are becoming more refined, however Chinese wine has yet to gain a serious foothold outside its own domestic market.
Chinese wine production saw large increases during the 1990s and modest growth during the 2000s. According to FAOStat, from 1990 to 2000, Chinese wine production by volume grew by 313%. From 2001 to 2011, the pace of production slowed somewhat, resulting in a 48% increase. In 2012, China produced 1.38 billion liters of wine, placing it near Argentinian production levels, but behind those of France, Italy, Spain, and the United States. In total, the provinces of Shandong, Jilin, Hebei, and Henan comprised 81% of 2012 production, while 19 other provinces/regions made up the remaining 19% of production.
Domestic Wine Prices
From January 2010 to October 2013, the average price for Cabernet Gernischt originating from the ChangYu-Castel Vineyard in Yantai, Shandong province, ranged from a low of US$9 per 750 ml to a high of US$27 (Wine-Searcher.com). Overall, the price averaged approximately US$16. In 2011 and 2012, prices were generally stable at approximately US$11 per 750 ml. In 2010 and 2013, prices noticeably increased from June to September and averaged over US$24 per 750 ml. These price spikes may be due to a poor harvest brought on by inclement weather. For instance, during the winter of 2009 and 2012, Shandong province was hit with heavy snowfall and blizzards, potentially damaging the 2010 and 2013 harvest. In addition, the slight uptick in prices at the tail end of 2012 may be due to Typhoon Damrey, which struck Shandong province in early August of that year.