China's wine import market is turbulent as many small players vie for dominance. (Shutterstock)
As China's wine sales take a hit from the government's ongoing anti-corruption campaign, a new report finds that the country's wine importers have entered an era of restructuring similar to China’s "Warring States" period of history.
The China Food and Drinks Fair (CFDF) recently published statistics finding that 1,300 importers dropped out of China’s wine market in 2012 out of a total of 4,936. In addition, 2,071 new players entered the market, which holds no clear front-runner. The state of flux and number of small players competing prompted the CFDF’s analogy to the time period in Chinese history when several small dynasties fought for domination.
According to Decanter China, importers are being squeezed by a pressure to de-stock China’s wine warehouses as the government's anti-graft campaign hurts sales:
The latest customs figures show a 20.7% drop in wine imports in volume to Mainland China for the first three months of 2014, versus the same quarter of last year.
At last week’s Vinexpo Asia Pacific trade fair, there was speculation about the about how much wine is sitting in China’s supply pipeline.
Matthew Rouse, managing director of importer Shanghai YRC Wines Co, said several sources informed him that tens of thousands of containers of mid to lower-priced wine have been abandoned outside of warehouses in the past five years. A container typically contains 1,500 cases.
‘We don’t know how much there is. But, we are right in the middle of a major structural change,’ Don St Pierre Jr, outgoing executive chairman of ASC Fine Wines, told conference goers in reply to Rouse’s comments.
As a result, the CFDF finds that importers are cutting their prices as they compete for market share. The long run, however, is more stable when it comes to the rising middle market. In an interview with Decanter, the CEO of ASC Fine Wines stated that thanks to China’s mid-range buyers, “a more mature market” is emerging.