China to dominate Asia's growth in wine imports

The new study, by economists in the University of Adelaide's Wine Economics Research Centre, project China's wine consumption to grow by between 40% and 60% between 2011 and 2018.

"China is set to change global markets for wines dramatically, just as it has been doing and will continue to do for so many other products," says the Executive Director of the Wine Economics Research Centre, Professor Kym Anderson, who is co-author of a Working Paper with Professor Glyn Wittwer of Victoria University.

"While rice wine has traditionally been the most common in Asia, income growth in China and a preference swing towards grape wine is gradually changing the region's consumption situation."

Professor Anderson says China has been rapidly expanding its own production of winegrapes, and is now the world's fifth largest producer of grape wine, yet its expansion in domestic production has not been able to keep up with its consumption growth.

"It is the sheer size of China's adult population of 1.1 billion people, and the fact that grape wine still accounts for less than 4% of Chinese alcohol consumption, that makes the import growth opportunity unprecedented," Professor Anderson says.

"We project that China's net imports of wine could rise by between 330 and 790 million liters during 2011-2018 once the full impacts of China's recent bilateral free trade agreements with Australia, Chile and New Zealand are felt."

He says Australia, along with France and Chile, stands to gain greatly from this opportunity.

"Exporting firms willing to invest sufficiently in building relationships with their Chinese importer -- or in grape growing and winemaking as joint ventures in China -- may well enjoy long-term benefits from such investments, just as others have done and continue to do for many other products besides wine," he says.

Professor Anderson says even China's recent "austerity drive" will not be able to hold back the tide of wine demand growth. "The austerity drive has dampened the growth in ultra-premium and iconic wine sales in China, but those quality wines are only a small share of total sales, so we project its impact on the overall volume of wine imports to be minor," he says.

The report is available online at: http://www.adelaide.edu.au/wine-econ/pubs/working_papers/0114-asia-wine-rev-apr2015.pdf