Bad news for Chinese winemakers: lowered tariffs on imported wines and growing production costs for domestic companies are starting to impact their market share.
“The increasingly growing imported wines have significantly influenced the sales of Chinese wines,” the General Administration of Customs said in a warning report. Customs data shows that China imported 430 million liters wines in 2012 with a year-on-year growth rate of 8.9 percent.
“The quality of Chinese wines is not as good as imported ones. Instead, low prices are the major advantages for domestic ones. However, foreign wine producers have developed low-end products priced at lower than 100 yuan, which makes domestic wines more difficult to sell,” said Xia Zhiyong, vice secretary of Guangzhou Wine Industry Association.
However, the Chinese wine market remains robust with strong growth projected. According to International Wine and Spirit Research (IWSR), the Chinese wine market will maintain a double-digit growth rate in the coming years and become the second largest wine consumption country in the world just following the U.S.
There are still growth opportunities for Chinese winemakers, but they can no longer compete on price. It is time for the domestic winemakers to revisit their strategy to reverse the slump and win over Chinese wine consumers.