The perfect evening routine for me to rewind after a long day of work is to just chill on my couch and enjoy some high-quality red wine while watching my favorite shows,” a Beijing-based white collar worker surnamed Wang told the Global Times on Monday. 

Wang also noted that she used to hang out with her friends all the time at restaurants and bars relaxing and enjoying casual conversation while sipping red wine. “But now I prefer staying indoors and not going out as much as possible especially during the COVID-19 epidemic,” she said.  

Wang is just one of many Chinese wine lovers who have shifted their consumption pattern as a direct result of the ongoing epidemic.

Affected by the resurgences of COVID-19, the number of wine importers in China has dropped. Industry insiders said that overall market demand and preferences for imported wine have been weakening, especially with restaurants facing the risk of being shut down due to tightened epidemic prevention measures on top of delays or suspension of wine deliveries for consumers.

Meanwhile, analysts also pointed out that consumers of wine are holding higher expectations for imported wine products, leaving the lower end of the market in less demand. 

In tandem, the competitive advantage of domestic wine has gradually improved, and some international wine brands have strengthened product localization and local production capacity to better serve the Chinese market, dampening demand for imported wine. 

Weakening consumer demand

A Guangzhou-based wine trader surnamed Lin told the Global Times on Monday that the import volume of wine has fallen by at least 50 percent year-on-year since Chinese New Year in February, mostly due to logistic disruptions posed by domestic sporadic outbreaks of COVID-19, tightened cash flow, and shrinking consumer demand.

In 2021, China imported a total of 427 million liters of grape wine, a year-on-year decrease of 1.4 percent, data from the General Administration of Customs revealed. 

Meanwhile, the number of imported wine business operators dropped from 8,181 in 2018 to 7,920 in 2019, signaling the first signs of decline, industry outlet Wine Business Observation reported, adding that although figures for 2020 and 2021 were not released, several industry insiders believed the decline would be even greater, possibly hitting 20 percent. 

Chinese wine consumers have been leveling up their knowledge and taste for imported wine, Zhu Danpeng, a veteran food industry observer told the Global Times on Monday, noting that some poor-quality products labeled with foreign tags are losing Chinese market share.

Zhu added that domestic COVID-19 epidemic flare-ups have further reduced the number of Chinese people uncorking new bottles. 

As China ramps up efforts to contain the spread of the coronavirus, tightened epidemic prevention and control measures, leading to delays in logistics, which also helped reduce the demand for imported wine. 

The epidemic control measures on transport of goods had caused rising uncertainty for Lin’s business, especially in Shanghai and the neighboring regions where affluent Chinese consumers used to be wine-lovers.

“The people in the Yangtze-River Delta, and in Shanghai city in particular, are prime consumers of imported wine, accounting for at least 30 percent of our market segmentation,” Lin said.

Late or suspended delivery in the region has made it difficult for the wine products to reach consumers lately, the insider said.

“The ongoing epidemic situation in China is one catalyst for the shrinking market demand, but it is not the only reason, other factors including inadequate inventories of imported wine have also contributed to the waning trend,” Huo Xingsan from the China Alcoholic Drinks Association told the Global Times on Monday. Also, from an industry-wide perspective, some wine merchants have left the trade due to weakened demand, Huo said.

Market analysts said that Chinese wine consumers now have more options as domestic wine manufacturers are cranking up production and investment, sharpening the competiveness of domestic wine brands.

Growing home brands 

However, Zhu noted that it is still a long way for domestic wine producers to go in terms of completely replacing the market demand for imported wine, while suggesting more technology and policy support is needed for home industry development.

China’s Ministry of Commerce announced in March 2021 that it would raise anti-dumping duties from 116.2 percent to 218.4 percent on imported Australian wine, which would last for five years. 

Lin is mainly in the French wine trading business after switching from Australian wine last year. The change on the source of supply has not disrupted his business much, with French wine being competitive on the Chinese market. 

The tariffs imposed on imported Australian wine have thwarted the Australian wine industry. Since March 2021, the import price of Australian wine has dropped by around 30 percent, one industry insider said. However, even if the duties were removed, Chinese wine traders are unlikely to return to Australian wine due to its lower profit margin compared with quality wines from France, Italy, Spain, Chile and many other countries.