Why China May Solve—Not Cause—The Global Wine Shortage

China's wineries plan to be producing a lot more of these soon. (Shutterstock) Recent news reports have been striking fear into the hearts of oenophiles across the world with ominous tales of how skyrocketing Chinese wine demand is going to exacerbate an ongoing worldwide wine shortage. While there are indeed several factors influencing a current shortage, China’s growing love for wine may be the future solution, not the cause. There’s no doubt that a global wine shortage is upon us. Morgan Stanley Research has estimated that the world is experiencing an "undersupply of nearly 300 million cases." This is due to a variety of factors, including bad weather in France and Argentina, declining amounts of land being used to grow grapes, and—the reason that everyone’s been focusing on—a rapidly growing number of Chinese drinkers. Don’t put away the corkscrew just yet, however. A new report by France’s National Center for Scientific Research finds that China is going to be producing a lot more of its own wine in the years to come—in fact, double the amount it’s producing now, in only five years. It’s not starting from a low bar either, as it currently stands as the fifth-largest producer of wine in the world. According to AFP: Boris Petric, an anthropologist with the research body, estimates it will soon have the most land under vine and produce more wine than any other country. In effect, Petric's prediction means that China will double its vineyard land over the next five years. In comparison, in 2012, Spain had 1m hectares under vine, followed by France with 800,000 hectares, according to figures from the Organization of Vine and Wine (OIV). While China's vineyard has increased by 90 percent since 2011, the 2012 figures put its total at 570,000 hectares and a large proportion of these vines are dedicated to table grapes. Similarly, China produced 14.8m hectoliters of wine in 2012, while France and Italy each turned out 40 million hl. This production will comprise several key players: foreign companies such as LVMH and Pernod Ricard, which are investing in Chinese vineyards such as Helan Mountain, domestic giants such as Changyu and Great Wall, and small boutique wineries such as Silver Heights. The epicenter of this expanded production will be Ningxia, one of China’s top areas for vineyards. According to Petric, growing grapes in Ningxia can actually be beneficial in helping desertification, as “the vines help to fix the sand and prevent sandstorms in cities.” The only question that remains is whether the stigma surrounding Chinese wine will persist, and who is going to be buying more of it: foreigners or Chinese consumers. Even top-shelf Chinese wines face some heavy prejudice both at home, where Bordeaux and Burgundy are prized, not to mention the stereotypes held about it abroad. However, Chinese wine has been taking home a number of awards in recent years, which may help to change people's perceptions and get them to start buying Chinese bottles even if the Bordeaux isn't sold out.

Why China May Solve—Not Cause—The Global Wine Shortage

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Published November 26, 2013

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Why China May Solve—Not Cause—The Global Wine Shortage