By Jim Boyce
Random wine thought I had while drinking a beer last night: Could Chile be the key to shifting the China wine market? Consider four things:
1.According to Customs, roughly 55 percent of the imported bulk wine entering China the last three years – 170 million liters of 305 million liters – hailed from Chile. This included ~45 percent last year. The vast majority is blended with domestic wine and sold under local labels.
2. In terms of official statistics, bulk wine accounted for ~12 percent of the market in 2008. Industry observers such as Ma Huiqin, who talks to wine technicians throughout China, say the take is closer to 40 percent because domestic wine is regularly double-counted (if company A buys surplus from company B, both count it as production)
3. If half of imported bulk wine is Chilean and if 40 percent of wine under Chinese labels is foreign, then the average bottle of “Chinese†wine is 20 percent Chilean. True, some producers use only local grapes while others blend wine from other nations. The point is a lot of of Chilean wine is being drunk in China. In fact, more Chilean bulk wine entered China in 2007 and 2008 than all imported bottled wine combined – 119 million liters versus 100 million liters. If you group Chilean bottled and bulk, the numbers are 126 million liters versus 93 million liters of wine.
4. Imported bottled Chilean wine is cheap compared to many of its competitors, partly due to a special trade deal. For example, you can buy it at 7-ELEVEN for about RMB60. And in some cases, prices are dropping, as at least one distributor is offering bottles to restaurants at RMB20.
My point? Chilean wines stands to offer the average consumer a combination of familiarity (“Hmmm, this kind of tastes like [enter big brand name], only betterâ€) and price (“It’s not that much more expensiveâ€). It might offer a kind of “stepping stone” from domestic labels to foreign ones, a shift that involves taste, since many of my Chinese friends like the fruitiness of many Chilean wines.
True, there are caveats vis-a-vis my position: imported bulk wine numbers have dropped this year, so the Chilean influence might ease; it is hard to say if Chilean bottled wine prices will drop; the majority of Chinese consumers lean toward French wine, for reasons more of marketing than taste; Iam relying primarily on Customs figures, and so on.
But it is a thought…
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It comes as a surprise to no one that Chile consistently offers excellent quality at very affordable prices–in every price range. As Chinese consumers become more demanding, they can still continue to enjoy this price-quality ratio by trading up the Chilean wine chain.
Jim is right on. Here in Canada I am drinking more Chilean wine than Canadian, American, French and even Italian. Price per taste Chilean is good value a lot of times. Just returned from Okanagan winery tour. On the flight home Air Canada served French wine, a non-descript quaffing drink. Even my Switherland seat mate was a bit put off. Air Canada cannot serve Canadian wine because it is too expensive compared to French. They should switch to Chilean. I figure the Chinese will develop their wine appreciation in a few more years, albeit according to their taste buds. We have a kin discernment for green tea. The variety and grades of green tea are equal, if not more extensive, to wine. The Chinese can tell what high prices to pay for an ounce of good tea. Recently I bought tea in Beijing at Can$100 a pound and I find the Taiwan tea my relatives gave me better. So the Chinese will soon be able to discern what is wine value and get over the French hype. All wine producers should pay notice if they are interested in the Chinese market.