The market at present

China's interest in wine has grown steadily since the 1990s. With no wine tradition of their own, Chinese are adopting wine as a healthy, new, low-cost alternative to traditional drinks like imported Cognac or Chinese spirits. An expanding middle class, rising incomes, a growing interest in Western lifestyle and tastes, and better wine education have driven this rise in consumption.

China is also the leading consumer of wine in Asia in terms of volume, having drunk 3.9 million hectoliters -- or about 520 million bottles worth -- in 2004, according to a study by the International Wine and Spirit Record and Vinexpo. China is also a largely untapped market for exporters, with foreign wine makers making up only 5.3 percent of the total volume sold in 2004, according to a Vinexpo study. Imported spirits accounted for just 0.3 percent of Chinese consumption. France, the traditional market leader, still dominates Chinese and Hong Kong wine imports (approx. 42 percent of total volume in 2004). But Australian wines have gained in popularity and were second after France in the total volume of imports in 2004 (22 percent). Other countries in the mix included the USA (11.3 percent), Chile (11.3 percent), Spain (6.6 percent) and Italy (5.6 percent).

With the decline of the tariff, which has dropped from the original 43% to the present 14% of imported bottle wines since January 1st, 2005, there’s been a rapid bloom of the high-end market in the first half in 2006, which benefits the production and consumption of wine and improves the market structure. From January to April 2006, the production of wine in large-scale Chinese wineries totalled 152.6 million liters, 9.90% more than that in the same period of last year. The profit was RMB 590 million, 11.88% more than in the same period of last year. The total production of wine in China in the first half of this year is expected to be 250 million liters.

Great growth potential in the coming years

On average Chinese consume only 0.3 litres per year (per person). Even in the more mature Hong Kong market, consumption is only 0.8 litres. Compared to countries like the USA (12 litres), Japan (3 litres) and France (59 litres), China has huge growth potential.
The main competition for imported wines in China comes not from the Chinese wines, but rather the other forms of alcoholic beverages. Wine is a way of life, it doesn't depend only on fashion; it depends on how people learn to appreciate wines. It takes time for people to understand, to adopt and adapt to wine culture. Since there are few quality wines and few varieties in China and there is great room for growth and increased options in the Chinese wine market.

Between 1999 and 2009, consumption of wine in China was forecast to rise 78 percent. By 2010, Chinese are expected to drink 5.7 million hectoliters of wine, according to a study by IWSR and Vinexpo. Wine is the sunrise industry in China. The annual rate of increase in the Chinese wine market is more than 10%, while the world’s increase rate is less than 1%. Although Chinese domestic wine brands take up more than 95% of the present Chinese wine market, foreign wines are superior in brewing technology, quality and even cost performance.

During the past several years' development China has grown to the third largest market for luxury commodities. More and more vintners prefer to survey and invest here. In the past, many investors came China only to visit the large city of Shanghai, but now they tour widely and survey other cities as potential markets. In China, it has been a custom to entertain guests with expensive top quality beverage. Though the hosts may do not know much about wine at all, they believe sharing a top quality wine is a good way to show kindness and hospitality to important guests and good friends at home. At this point in the new millennium many experts believe that China will surpass the United States and even challenge France as the largest wine market in the world.