China, Hong Kong “Confirm Dominance Of Bordeaux” In Global Wine Market

China & Hong Kong Account For Nearly 60% Of Bordeaux’s Total Export Market

Bottoms up for Bordeaux winemakers

Bottoms up for Bordeaux winemakers

Wineries from Burgundy and the Loire Valley in France, as well as the U.S., Canada, Australia, Chile and Italy may be working overtime to catch up, but for the time being it appears that mighty Bordeaux still has a healthy head start in China’s wine market. As Decanter writes this week, mainland China this year has maintained its lead over Germany as the world’s third largest importer of Bordeaux wine, with imports increasing over 85 percent to 314,000 hectolitres, according to figures released by Conseil Interprofessionnel des Vins de Provence (CIVB). This puts the Mainland, with US$315 million in imports, behind the UK (US$373 million) and red-hot Hong Kong (US$444 million), meaning mainland China and Hong Kong now currently account for nearly 60 percent in value of the rest of the top 10 export markets combined.

Still, the CIVB noted this week that that two thirds of gains across all exports this year — including to China — were among wines priced at less than US$6 (38 yuan). This means that the Bordeaux craze still sweeping China doesn’t necessarily have to come to the detriment of other winemakers. Rather, major opportunities are emerging now in China’s mid-range wine segment, particularly for Burgundy producers — who benefit from their instantly recognizable “Frenchness” but are starting with more of a blank slate among middle- and upper-middle-class Chinese. As some industry insiders have pointed out, the strength and weakness of Bordeaux wines both lie in their increasing ubiquity. Said Pierre-Henry Gagey, co-president of the Burgundy Wine Board (BIVB), “I believe Bordeaux has made a mistake by exporting such huge volumes of cheap wine to China,” adding that Burgundy producers “need to emphasise our quality, our terroir – and you can’t do that for €3.”

Will the bifurcation of the Bordeaux market in China — between the likes of Lafite, Latour and Mouton Cadet on one end and 3-euro plonk on the other — necessarily bring about boom times for every mid-range producer? Probably not, as that segment will likely become even more muddled than it is today, with new entrants from the U.S., Chile and Argentina entering the mix. But labels that aggressively price and position themselves as accessible but expensive enough to not have to compete either with the Lafites of the wine world or the low-end, 40 yuan bottles will likely be the long-term winners.

Then again, international wineries shouldn’t think they won’t have to face domestic competition for decades to come — earlier this month, He Lan Qing Xue’s Jia Bei Lan 2009 Cabernet blend became the first-ever Chinese wine to win a top honor at the Decanter World Wine Awards.



Market Analysis