March 19, 2010

China Fastest Growing Market for California Wine

While 2009 saw a decrease overall in the near $1 billion (US dollar) exports of California wine the outlook for 2010 is looking good according to data from the Wine Institute of California. China (including Hong Kong which re-exports wine to the mainland) accounted for $83 million in exports and is by far the fastest growing market at over 70% overall. China currently ranks number 8 globally in terms of wine consumption but the number of Chinese drinking and enjoying wine is set to grow immensely according to Vinexpo the international wine and spirits association.

Figures for 2008 show that imports accounted for 11.8% of Chinese wine consumption with France the largest supplier. By contrast imported wines account for almost 1/3 of wine consumption in the USA. Always adept at developing new business Chinese are ramping up wine production around China. But as California well knows it takes a lot of work and time to grow vineyards and create good wines. In the interim Chinese imports could grow to a level similar to that in America and be a real opening for California wines in the immediate future. The Wine Institute says it is making progress introducing its wines to Tier 2 cities. My recommendation is to focus instead on select lower tier cities.

Download the 2008 China Wine Market report from the USDA Agricultural Trade Office. The report indicates that USA wines are losing to Europe, Australia, and Chile. The report says the key is to create brand awareness of the US as a premier wine producer. This is wrongheaded thinking. Better to focus on creating brand around California wines - clearly the leader in US wine exports. Notice the ugly USA banners showcased at a trade fair in the report. That sort of marketing will not be effective in the more nationalistic Tier 2 cities and less developed parts of China....

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