When I heard about
Chinese wine a few years ago, the first question is “are they making wine?”.
Knowing about Chinese drinking culture and their love for traditional spirits, China
doesn’t seem to be right place for wine. However, discussion on China wine
market in the class, and a bit of research on the market astonished me. China
is the 2nd largest country owning vineyard behind Spain, and 8th
largest wine making country. Just like other
manufacturing industries, Chinese wine industries are growing fast based on
huge consumption based and capital investment.
Even though, there are
diverse views on the future of Chinese wine industry, there are some facts
important to notice; new vineyard development by government supports, continuous
inflow of foreign wine experts, and strategic alliance between global wineries
and local makers.
This movement of Chinese
wine industry is exactly similar to other successful Chinese manufacturing industries
such as electronics, industrial equipment, and automotive. This is a proven success
formula of Chinese business, and that’s why I am more interested in the future
of Chinese wine industry.
Within short history
of wine making, some of local winery such as ‘Grace Vineyard’ is writing a success
story. A vineyard located in Shanxi is getting recognized by global wine
professionals and institutions. By focusing on quality with France wine
experts, sophisticating wine bottles and label, and broadening marketing channel
by support of government, Grace Vineyard is growing into international beyond
local market.
Even considering some
negative effects on wine market – anti-corruption rule, drinking culture and
behaviors – local demand is growing more than 12% CAGR.
Chinese growth strategy,
growing success story, and strong demand. That’s why I expect growth
of Chinese wine industry in near future.
I concur!
ReplyDeleteGreat observation, Shinmyoung. One thing I thought was particularly interesting was the fact that the Rothschild family partnered with CITIC to grow vineyards in China. CITIC (China International Trust Investment Corporation) is run by the Chinese government and is one of the largest state-run investment companies in the world. To me, CITIC's partnership with Rothschild potentially signals two things:
ReplyDelete1) CITIC views vineyard investment and real estate development in China as a profitable long-term investment
2) There is a push by the Chinese government to develop the country's wine industry.
CITIC's investment mandate is likely influenced by the Chinese government's goals. My guess is that the wine industry in China will flourish because the Chinese government will make it happen.
Just my two cents!
Thank you Shin and Nike! Great insights. Simply as a curious consumer, I am curious to see how a wine region will develop with this magnitude of available capital. As you point out, all of the big players recognize the size of the potential domestic Chinese market but given the local population's intense desire to consume typicity of other cultures, will Chinese wines be made simply as quality mimics of the great regions already producing. Will the economic pressure and market opportunities allow local winemakers make wine to a local terroir and if so, when in the life cycle will this be able to take place?
ReplyDeleteLooking at the global implications, what will these Chinese wines do to regional prices that are dramatically impacted by local tariffs. I do not foresee international East Asian markets opening quickly or without tension but with significantly more supply coming to geographically local markets, I hope that US wines will become more competitively priced as some demand shifts toward these quality Chinese products.