- The pandemic has wrecked worldwide trade; it has provided China’s local wine sector a much-needed boost.
- Exports to mainland China will fall from $419 million in 2020 to $13 million in 2021 due to tariffs ranging from 116 to 218 percent.
The human toll and economic cost of Covid-19 have been staggering, including for the global wine trade. But it has also meant opportunity for some, with China’s struggling producers among them, says an article published in Wine searcher.
Producers have improved their quality dramatically over the last decade, earning thousands of awards from competitions such as Concours Mondial and Decanter, as well as praise from experts such as Jancis Robinson and James Suckling. China also has a top-three wine education industry, a growing niche of customers interested in items such as craft beer and spirits, and a robust e-commerce sector. Despite heavy investments in quality and marketing by the local wine industry, customers have been fickle. Production has dropped by more than half since 2015, with industry revenue accounting for less than 3% of Baijiu, the country’s national spirit.
For one reason, the market for foreign wines has become more competitive. For some, the threat is existential, as seen by Chinese duties on Australian bottled wine in March, which coincided with Canberra’s call for an investigation into Covid’s origins and did not go over well in Beijing. Wine Australia says that exports to mainland China fell from $419 million in the first half of 2020 to $13 million in 2021 due to tariffs ranging from 116 to 218 percent.
Importers face a series of difficulties. Not only is the cost of shipping wine to China rising, but importers are also dealing with departure and customs delays, which can result in expenditures ranging from reefer containers being plugged in for extra weeks to sales being missed due to wine being late for, say, Christmas sales. (On the social media platform WeChat, Ziegler’s shipping executive Florian Chaoloine quipped that bottle labels should declare that wine was aged 12 months in wood and six months in a shipping container.) Due to China’s zero tolerance for Covid, delays can occur at any time.
The country’s near-quarantine status also contributes to a surge in interest in Chinese wine. Consumers who are unable to travel overseas are discovering their own country. While Covid outbreaks can cause travel disruptions, the airways and railroads have mainly stayed open. The State Council projected domestic travel to be 88 percent of 2019 levels in the second half of 2021. Unknown areas, such as wineries, attract adventurous tourists with spare means and a yearning for unique life experiences. Traditional tour companies like Easy Tour offer hybrid itineraries of vineyards and historical sites, while boutique operators like WildChina/UnTour handle in-depth tours.
Seizing the opportunity
China’s wine industry is keen to leverage this blend of importer difficulties, home-court advantage, and national pride. From top to bottom, much of that industry is in motion. Here are just three examples.
In June, central government authorities backed Ningxia’s plans to double vineyard coverage and boost production to 300 million bottles per year by 2025, with stretch goals of tripling coverage and producing 600 million bottles by 2035, which would put it on par with Bordeaux. And Ningxia, a region largely unknown for wine a decade ago, now has active sub-regional groups. This year, Yinchuan Wine Association had its own pavilions at trade fairs, hosted a distributor conference at home, and organized a promotional tour across China, including 36 tutorials in 20 cities.
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Source: Wine Searcher