China, the new market for middle- and high-end wines?

by Eve Resnick on November 14, 2008

in International Markets

Continental China is the Eldorado for the Western wine industry. At least, that’s what you would think when reading various studies and articles recently published. The main reason of this renewed or continued interest is the switch of the Chinese consumer from hard drinks to wine.

The French Castel Group is one of the leading wine companies, being the owner of the Nicolas chain of wine stores and until recently, of Oddbins as well as the new owner of the Bordeaux negociant Oenoalliance. In France, their brands, Baron de Lestac (Bordeaux) and Roche Mazet (Languedoc) have a lot of success and sell very well in supermarkets for under 5 euros.

Established in China since 1998, Castel owns a wine estate called Chateau Changyu Castel, and a bottling center in partnership with Changyu, the country’s biggest wine company in the country. “Castel saw its sales volume reach 5.5m bottles in 2008, double that of 2007. The company expects a further rise of 18%, or 6.5m bottles, in 2009”, wrote Jane Anson in Decanter.

The French are not the only one looking at the growing consumption of wine in China. The makers of high-end Italian wines from Tuscany are now turning their eyes towards continental China. Enoteca Italiana, makers of famous Tuscan red Chianti, its upmarket cousins Nobile di Montepulciano and Brunello di Montalcino opened The House of Tuscan Wine in Shanghai in July to promote their wines. At first, they were targeting the 40 to 60 year-old consumers as having the best disposable income. “Our new target is in a range of 20-35 years old: graduates with stable jobs, well-paid and with a Western model of lifestyle and food habits,” said Alessandro Mugnaioli, head of foreign relations at Italy’s wine promotion body Enoteca Italiana, to Reuters correspondent Svetlana Kovalyova.

Italian wine exports to China remain tiny at about $20 million in 2007 compared but they jumped 64 percent last year, making Italy the fourth-biggest wine exporter there after France, Chile and Australia.

The bet of most Western winemakers is that, even if the financial crisis affects China in 2009, the wine consumption will keep increasing and open new doors to receding traditional markets, such as the US or Japan.

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