Fongyee Walker MW and Edward Ragg MW analyze the evolution of China’s fine wine markets.
Anyone following international media accounts of China’s lagging economy and, more especially, the wine press’s narratives as to the decline of wine consumption in mainland China could be forgiven for thinking that this part of the world has little sunny on the horizon in terms of a fine-wine future. When Penfolds recently launched its Grange La Chapelle blend in Shanghai, some in the trade wondered whether even Penfolds’ most diehard China fans would be willing to fork out the RMB required for a single bottle. (One might add that this could be a tall order for Australians, at A$3,500 per bottle, especially in the context of ongoing trade wars, currency fluctuation, and compound uncertainty.)
Particularly doom-laden reports reference the recent requirement that no alcohol of any sort be served at official Chinese government functions, suggesting this will somehow compromise the entire wine industry and irreparably damage sales of both domestic and imported wine. Often citing the decline of wine import companies, such articles represent China as a wild roller coaster of a wine market, with peaks and troughs as frightening as any found at Shanghai’s Disneyland.
China’s fine wine scene: Authentic, sustainable, engaged
Certainly, it is true that less wine overall is being sold in China and that, at least in a business context, the budgets companies previously enjoyed to entertain and woo—where certain fine-wine brands were de rigueur, not least Penfolds—are not what they were. But the above government directive and corporate use of wine have no impact on the practices and behavior of those fine-wine-loving private individuals who are happily amassing their own wine collections; fine-wine lovers who, post-Covid, are increasingly traveling abroad to global wine regions and interacting with wine in increasingly sophisticated ways. In fact, there is a clear argument to be made that an authentic, sustainable, and genuinely fine-wine-engaged Chinese market is on a steady, modest, but increasing climb, albeit one without the crowd-drawing appeal of amusement rides.
Related
Embedded in the world of Chinese wine lovers, we witness ongoing positive developments: from the growth in appreciation of more premium white wines—from top-quality New Zealand Sauvignon Blanc, to the very best Rieslings of the world—to the persistent rise of private consumers who demonstrably love wine and actively seek out wine education (this latter rather less reported). Moreover, the country has multiple wine scenes stretched across major and “minor” cities that are themselves not affected in any direct way by the new government policies.
It is true that some importers and distributors are suffering. But there are also many who are not—significantly, the sort who have spent the past several years cultivating private clients. True, a retail arm such as 1919—which puns in Chinese on the phrase to “want alcohol”—is closing some 1,500 stores across the country; and there are large distributors handling both fine wine and spirits—even previously profitable Chinese spirits brands—that are downsizing operations and laying off staff. But in our view, this is continuing a process of rationalization that was sorely needed.
Admittedly, in our experience, consumers here, even ardent wine lovers, are more careful with regard to spending and may not commit to a longer wine course or more expensive tasting experience, at least until closer to the date. The Wine & Spirit Education Trust (WSET) in China is not recruiting students to the same extent it was before Covid. But the uptake of wine-loving students has very much to do with how experienced and established particular WSET providers are; and in the case of our own app (Dragon Phoenix), we still have a healthy cohort of diploma students and sufficient demand for the WSET levels 2 and 3 across different cities to warrant continued development.
Content from our partners
Yes, the WSET is not the bellwether of all things wine education, but it is a barometer. Notably, most of our students now come from the pool of private individuals mentioned above, though there is still some funding from the trade. But in China, unlike a great deal of the rest of the fine-wine world, it is still very much the consumers who know and appreciate more about the wines they buy, rather than the trade (which often struggles to conceive how to position, market, and sell their products).
Winning hearts and minds
So, can we say that mainland China’s fine-wine scene is being “silenced,” as some reports suggest? Far from it. Instead of a failing scenario, we are witnessing changes that should result in a more rationalized and more realistic overall market, where there is daily growth of wine lovers and people who enjoy wine for the sake of the product rather than as a commodity or status symbol. Moreover, not everyone has bought into the doom-and-gloom reporting and forecasting. Don St Pierre Jr, who with his late father previously ran ASC Fine Wines before Suntory became the major stakeholder, has bought back the company and is planning a rebranding and entirely different platform for attracting China’s new fine-wine lovers, showing a belief that in this new China, wine is now, and only now, truly winning over the hearts and minds of consumers.
