The ‘Big Six’ nations represent over 90 per cent of bottled wine imports in China. Three are Old World: France, Italy and Spain. And three are New World: Australia, Chile and the United States.
The Old World has long ruled because France dominated, with about half of the market. Every year, I had to create new titles like “Stats show France versus everyone“, “Va-va-vroom! France continues to race ahead” and “France spanks everyone (again).” France’s lead seemed invincible. Now it is gone.
The Old World trio has been steadily losing share and finally fell behind this year. As noted here, New World rivals now lead for value (Australia) and volume (Chile).
This certainly doesn’t doom the Old World: a six-month sample can easily be skewed by stock levels, exchange rates, harvest output, and more. But the numbers fit a pattern of New World nations taking Old World share.
I had insomnia last night and used my minimal number-crunching and chart-marking skills to look at volumes of bottled still wines from 2010, 2012, 2014, 2016, 2018 and the first-half of 2019. Here’s a look at the Old World and New World trios.
That is quite a reversal. The peak for the Old World here is 2012, when it had a 65 percent share vs 25 percent for the New World. By 2018, that had dwindled to 51.5 percent to 39 percent. And in 2019 so far, the New World has flipped the script and leads 54.5 percent to 38.5 percent.
This is mostly a matter of Australia and Chile taking share from France.
(Italy has been flat while Spain has seen bursts of volume but declined of late. The U.S. is less than 1.5 percent, due to the trade war with China, but has under-performed for most of the decade.)
Here’s a look at both charts combined. This shows even better how China has become a three-horse race among Australia, Chile and France. These three have over 75 percent of the market by volume and value.
There are lots of reasons for this. In Australia’s case, I gave ten reasons this year for the nation’s success. Chile, like Australia, has a free trade deal with China that gives a 14 percent advantage versus France, Italy and Spain. Chile also makes plenty of fresh fruity wine using well-known grape varieties, although they are coming in at a very low price, about USD2 per bottle this year.
As for France, and notably Bordeaux, it’s complicated. Bordeaux has been a default buy for Chinese consumers seeking a status symbol for gifting and entertaining. As a guiding light for China’s own producers. And more.
But along with providing some of the world’s best wines, it’s also a source of sub-par products consumers buy by default and find disappointing, a situation underpinned by the many OEM (private label) wines found in China.
And, well, there is plenty more, so I will write a separate blog post about China and France. And if I have insomnia again tonight, I’ll try to make charts for import value.
For now, it will be interesting to see how the second half of 2019 unfolds for these key New World and Old World sources. This is especially crucial given the recent wine market contractions. When the pie is growing, we see almost everyone getting a bigger slice. But when it is shrinking, there is much more pressure.
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