[A version of this post appeared first in Grape Wall newsletter. Sign up for free here.]

Them youngsters. And their youngster wine-making ways.

The just-released list of participants in the “Young Generation China Wine” area at next month’s Wine to Asia trade fair in Shenzhen is a bright spot amid the doom and gloom currently around imports, production and sales.

First, the number of producers has risen from nine at the inaugural pavilion last year — when the group’s acronym was YGC — to 19 yesterday, with more than two weeks to go. (See my video of last year’s crew, complete with catchy music, here.)

Second, YGCW symbolizes the growing diversity within a local fine wine trade often seen as obsessed with expensive Cabernet-driven Bordeaux-style wines that are far from ideal for an emerging consumer market. Instead, this group covers a wide range of grape varieties, wine styles, provenances and price points. (See some examples below.)

Plus, stories, stories, stories, from the rugged coastal regions in Shandong to the wide flat arid ones in western China to the soaring mountain valleys of Yunnan in the south. Just the creativity of a new wave of labels by Chinese producers is enough to get some consumers picking up bottles. Here are a few from our World Marselan Day party this Saturday.

On top of this, YGCW members are the type to connect directly with lots of consumers, the type you are most likely to see at wine bar popups and at festivals, not only those for wine but also for whisky, coffee and [fill in the blank]. This is in contrast to some established wineries that gravitate to those standard dinners at high-end restaurants and five-star hotels where food is served one dish at a time, each paired with a wine, which is how almost no one eats or drinks here.

Of course, YGCW is far from the only group of local wineries collaborating in China. We can find many regional groups, with one of the best being Yinchuan Wine Association, although membership is of course limited by geography. Other groups draw on wineries from different regions, though these often gravitate toward the older more conservative producers, including some of the biggest, based on my observations.

What makes YGCW stand out, and why I think it is growing so fast, is that it tends to attract people who might be spread across China but are close in spirit in terms of pushing the boundaries of local terroir, making intriguing wines and connecting directly with retailers and consumers. The moxie of the YGCW members is good for the trade and consumers as a whole.

You can find the full YGCW list for Wine to Asia at this link. And below are a few examples of YGCW members, which are found everywhere from Inner Mongolia, Ningxia and Yunnan to Shaanxi, Shandong and Sichuan.

Xiao Pu

Run by former sommelier and wine buyer Ian Dai, Xiao Pu is a driving force behind the YGCW. Dai has made wine in a half-dozen regions of China, with a wide range of styles, from orange wines to soft plush reds to pet-nats, plus cider and gin, and he is among the most active in reaching out to wine bars and consumers. The red blend shown above is called “The Gathering” and is one of his most successful wines.

FARMentation

Luo Yuchen has combined steady gigs at wineries such as Jade in Shaanxi with projects around the country, including in Yunnan and Ningxia. As noted in my last newsletter, he is now pursuing a “renaissance” project to boost old brands and veteran grape varieties in China, with the first one inspired by Danfeng winery, founded in 1911 in Shaanxi.

Jiang Yu

Named after its founder, this garage winery in Qiushan Valley — close to Lafite’s Longdai, Treaty Port, Runaway Cow, Mystic Island et al — works with both regional grapes, including a small plot of Grechetto, and Chardonnay and Cabernet Sauvignon from Yunnan. Plus, experiments with Chinese oak barrels.

Mountain Wave

This winery in the rising Jinshan / Gold Mountain area of Ningxia focuses on an unexpected trio of Malbec, Marselan and Pinot Noir. These are used to make single variety wines as well as blends, both in still wine and pet-nat form. The ‘p.m.m.’ on the label above refers to the three varieties in question.

DEVO

Another Ningxia operation, mostly focused on traditional-method sparkling wines, and dabbling in other styles, including a pet-nat made with Cabernet Sauvignon.

Gloriville

This operation in Zhangjiakou, just north of Beijing, is focused on minimal intervention wines, including with the white grape Longyan / Dragon Eye, which has something like 800 years of history in this area of China.

Check out these producers and more during Wine to Asia!

The current China wine market is one where imports, production and consumption fluctuate between stagnation and decline but where the number of wine contests, master classes, publications and trade fairs has seen growth.

There are endless fairs spread across the country and held practically all year long, ranging from that annual spring behemoth in Chengdu to tiny local gatherings.

Out of all those, there is only one fair in which I am active, Wine to Asia, an annual three-day affair held each May in Shenzhen and backed by Veronafiere.

Here are eight reasons why I like Wine to Asia, besides Shenzhen and the Greater Bay Area being among the most economically healthy and heaviest wine-drinking spots in the country.

Cutting Edge

Wine to Asia has a strong focus on emerging trends, with the best example being the Living Wine zone it has featured since 2020 and that is arguably the show’s most popular area. Small-scale producers of orange, natural, pet-nat et al wines from a dozen-plus nations join forces to create one huge diverse fun group.

And the fun spills over to Shenzhen’s bar scene after the fair finishes each day –last year the Slovenians led the way at a bacchanalian 100-plus bottle bash at The Weeknd wine bar.

Local Heroes

Wine to Asia also supports local wines, including a pavilion for YGC — recently renamed YGWC — the Young Winemakers of China, which launched last year in Shenzhen with nine participants.

The participants include both boutique wineries and freelancers who source grapes and rent equipment to create their own brands. Products range from barrel-aged Bordeaux blends to pet-nats and orange wines to grapes such as Dornfelder, Black Muscat and Grechetto. Plus, some ciders and fruit tree wines.

(Word is this pavilion will have twice as many participants this year.)

Booze Talk

It wouldn’t be a trade fair without master classes but at least wine to Asia offers a mix of general themes from Bordeaux to Brunello, Riesling to Malbec and Greek to Chilean to Italian wines, with quirkier events featuring intriguing personalities, such as insights into the biodynamic goals of Ningxia’s Domaine des Aromes.

The bonus is a “pop-up talk corner”with no registration and fun topics, from the experience of a Chinese winemaker in Burgundy to the wine industry in Belgium’s Flanders area to new versus traditional styles of sake.

Expect more this year, including a panel on China’s Gen Z wine consumers.

Beyond The Fair

Wine to Asia simultaneously organizes the Greater Bay Area Wine Week, which featured some 50 wine bars in Shenzhen, Guangzhou, Foshan and Dongguan last year and spotlights the connections among producers, importers, distributors and consumers.

There are also offsite events during the fair, two of which I helped organize last year: a Grace Vineyard Marselan-themed wine dinner at Xiang Jiao Hunan restaurant and a Jing-A / Grace Marselan beer and wine tasting at The Weeknd wine bar. (I also joined a Greek wine dinner by Hellenic Agora and two off-site tastings by the YGC. Good stuff.)

Project Support

Speaking of Marselan, Wine to Asia has supported my World Marselan Day project, both at the fair, via a tasting of 30-plus wines last year, and beyond, via a Marselan blending class at The Merchants in Beijing.

Creature Comforts

So many fairs and roadshows have crap food and coffee. But given Veronafiere runs Vinitaly, which has a wealth of food options at its annual Verona fair, it’s no surprise that spirit is increasingly found in China, including a cafe (complete with coffee cocktails), gelato, kombucha and decent food options.

(I’m hoping they also add music this year — maybe a few funk-oriented DJ sets toward the end of the day to reenergize people?)

Standard Fair Fare

Finally, In case anyone thinks Wine to Asia is just about niche wines, It also has a good selection of the countries, regions and brands that make up the backbone of sales in China.

Italy and France and Chile and South Africa, Brunello and Bordeaux and Malbec and Riesling are all there. And it’s fun to catch up with favorite brands from around the planet, whether that means Colome from Argentina or Spier from South Africa or Garzon from Uruguay.

The Man Incontro(l)

While many people react to new ideas with skepticism — why would anyone care about some unknown grape like Marselan? — Incontro actually goes out in search of them.

All this is driven by local Veronafiere head Simone Incontro. As with all trade fairs, there is a need to sell booths and pavilions. But unlike many, Incontro also has the consumer in mind, including with those emerging trends, such as Living Wines, the YGC and the pop-up talks. And this sense is based on first-hand experience of visiting wine bars, restaurants and retailers venues across the country.

This year’s Wine to Asia is May 9 to May 11 and the cutoff for booking a booth is soon! If interested in joining, click here for more details here (English) or click here (Chinese) or contact me and I will put you in touch. (I received no money for writing this post, I simply appreciate having a special fair such as this in China as well as the support for World Marselan Day.)

Cathay Pacific has added one Chinese wine to its first class service and three to business class until May 31 as part of its ‘Discovery Wine Series.’

Domaine de Long Dai 2020 from the Shandong-based winery of DBR Lafite is the first class option, while a trio of Ningxia wines make business class.

That threesome includes ‘Tasya’s Reserve’ Cabernet Franc 2018 from Grace Vineyard, which has wineries in both Shanxi and Ningxia.

Also making the cut were Silver Heights ‘Jiayuan’ Marselan 2021 and Xige Estate ‘Jade Dove’ Single Vineyard Cabernet Gernischt 2019.

First in first class

Grace is no stranger to Cathay Pacific, with the airline’s website stating that, “In 2009, Grace Vineyard’s flagship wine Deep Blue 2008 was selected by Cathay Pacific as the first Chinese wine available in First Class and Business.”

At that time, Chan wrote a post called ‘Bold enough to accept an underdog’ on the Grace website, about the mixed reaction of passengers to her wine in the wake of high-profile food safety scandals in China.

Given that context, she wrote “I cannot blame those who fail to trust China’s wine” and contrasted with those who might defend an inferior wine.

“The brand determines the fame,” she wrote. “A man might find excuses for a vintage made by a renowned foreign winery that fails to please him. On the other side, it is impossible to accept a local vintage in such manners.”

Fifteen years later, trust and interest in Chinese wine is much higher, thanks in part to veteran producers like Grace.

Four from forty

The four China wines were chosen from among forty by Cathay Pacific drinks manager Ronald Khoo and consultants Debra Meiburg and Roy Moorfield.

There is also this from a press release that in general is taking wine just a bit too seriously:

“To ensure the wines are served to the standard expected by First class passengers, Khoo conducted a training session with a core group of cabin crew, guiding them through a tasting of the entire ‘China Wines’ Discovery series. Talking points about the series were also disseminated to other cabin crew members before the start of the promotion.”

I hope that didn’t cut into any of the time designated for safety training. Get more details about the Cathay Pacific wine program here.

Mention that Jiangyu makes some of China’s quirkiest wine and the ears of those in the trade perk up .

That’s because the pronunciation of this garage winery in Qiushan Valley in Shandong sounds close to that of the country’s largest producer, Changyu, the latter associated with mass market products rather than niche ones. And is even based in the same province, Shandong.

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But Jiangyu is a tiny operation, encompassing just two rooms: one with all of the production equipment and–separated by a glass wall–one serving as a cellar. Owner Jiangyu–yes, the winery is named after him–says the facilities were whipped together in just two months.

So, what’s quirky about Jiangyu? Here are three examples:

• Jiangyu is the only China producer of Grechetto I know, with access to 7 mu / half a hectare of these grapes, planted near the valley. (He translated the grape name to “ge tu”, meaning “a journey accompanied by song.”)
  
• Jiangyu is experimenting with barrels made that use local oak, sourced from near the border with North Korea.
  
• Jiangyu is sourcing grapes from over 2000 meters high from over 2000 km away in Shangri-la in Yunnan province. He has just over one hectare of grapes there, split between Cabernet Sauvignon at 2300 meters and Chardonnay at 2600 meters, with a former employee of LVMH’s Ao Yun overseeing the fruit. And he says that temperature-controlled shipping to get those grapes to Shandong is pricy.

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Owner Jiangyu has only been working at the wine game five years but has quickly made a name for himself. And will be presenting his wines in Italy this week as part of an annual ‘Road to VinItaly’ tasting hosted by Wine to Asia.

I also visited his winery last weekend and he pulled samples from about a dozen barrels: it was fun to see the uniqueness and expressiveness of each.

An elegant pure Chardonnay with refreshing crispness and chrysanthemum aromas. A Grechetto with a bigger smoother body and notes of everything from chamomile tea to orchard fruit — think pears — to a slight creaminess. And a Petit Manseng with sweet-and-sour character I could see pairing with many Chinese dishes.

A highlight was that Yunnan Cabernet Sauvignon: from the first whiff I knew it was from distant places, with its mild but vibrant violets and pure wild dark berry.

What a surprise to be drinking these wines, using grapes from near and far, in a tiny nondescript building with a winemaker still yet to each a half-dozen years under his belt. I happily tasted through those wines, nearly one year after meeting Jiangyu last May at Wine to Asia Shenzhen, and thought how those tasters in Italy are going to have a real treat this week.

Set the course due west: China wineries Jiangyu from Shandong and Silver Heights are heading to Italy this week.

Both will participate in the event ‘La Via della Vite: A Natural Wine Journey Across Eurasia’ spearheaded by Wine to Asia (Veronafiere), ahead of its annual trade fair in Shenzhen in May, and by Vignaioli e Territori (VI.TE.), an association focused on natural wines.

The event is slated for April 12 at Vino Esclamativo, in the historical city of Mantua, with nine wineries from Italy, China and Austria, a brewer from South Korea and a cheese partner. Both Chinese wineries have ties to Italy.

Silver Heights CEO Marco Milani, who has helped spread the brand around the globe, hails from Italy.

And Jiangyu is the sole producer I know in China of Grechetto, a grape that originally hails from Greece but is most associated with central Italy, notably Umbria. That connection excites owner Jiangyu,

“It will be very interesting to present my wines, especially Grechetto, in Italy because that is its home country,” he posted online. “I never expected to bring it back to where it comes from, but life is full of surprises, so let’s just rock.”

Given Jiangyu participated in last year’s Wine to Asia, in some sense things have come full circle.

See Wine to Asia’s WeChat post on this week’s event here. And the poster below for more details.

[Note: A version of this post first appeared in Grape Wall newsletter. Sign up for free here.]

Xige Estate, the sprawling high-tech Ningxia-based winery with parallels to Penfolds, is expanding to Tibet, per wine media reports.

Xige Estate was established in 2017 and quickly burst onto the scene thanks in part to wide swaths of vineyards planted in the Qingtongxia sub-region as early as 1997, previously used by Pernod Ricard and then-partner Guangxia and by the 48 contestants from 17 nations in the Ningxia Winemakers Challenge. These were paired with a high-tech setup, including VinWinzard monitoring system, and international consultants alongside operations manager Liao Zusong.

Also helping Xige get off to a quick start: owner Zhang Yanzhi, a Bordeaux-trained winemaker, headed importer and distributer Easy Cellar, known for its success in selling Penfolds Max.

The company has a stated aim of doing everything from mass market labels to top-end ones — it launched a RMB3000 / USD415 Pinot Noir — which fits that Rawson’s-Retreat-to-Grange mentality. And had initial vintages using a numbering system–N28, N50 –that seemed akin to Penfolds ‘Bin’ series. In any case, the most recent big news is about Xige’s project 2600 meters high in Tibet.

The operation is based in Zugong County in Tibet, near where that region intersects with Sichuan and Yunnan, across the border from Deqen County and its well-known Shangri-la wine scene.

Per Huaxia Wine Journal and other sources, the official announcement was made by Zhang during a March 15 banquet. The project covers 5000 mu (330 hectares), with 2000 being established vines and 3000 to be replanted. There are also several thousand vines over a century old, with some over three centuries, per media reports.

This is not expected to be the last project for Xige, as producers now seek a broader footprint and more diversified portfolios to appeal to consumers, including those for premium wines. We don’t only seen this with large to mid-sized operations but also smaller players exploring the country’s terroir, including FARMentation, Xiao Pu and Petit Mont.

Of course, Xige’s is far from the first modern vineyard or winery in Tibet. Pazhu, for example, has staked a claim to the highest vineyard in the world, according to Guinness, measured at 3563 meters above sea level in 2018.

And a high-altitude China wine class by Sophie Liu at this month’s Chengdu Wine Fair featured not only Pazhu but also Damei Yong, founded in 2009, and Qiu Zi Ka 1865, named for the year a famed French missionary arrived in the area.

There are others, too, including Tian Lu, which claims the world’s highest winery at 3911 meters.

None of this is a knock on Xige. It’s still fairly early days for the modern wine scene in those parts and China at large.

We also see other newcomers planting a flag at high altitudes, including — here’s that name again — Penfolds, which is active across the border in Shangri-la, using Cabernet Sauvignon from there and Marselan from Ningxia to create the wine CWT 521 — CWT stands for China Winemaking Trial.

(There was confusion a few years ago as to whether or not Penfolds made its China wines with Xige facilities, with the latter stating this was not the case.)

As with Xige in Tibet, Penfolds is following in the footsteps of others, such as LVMH’s Ao Yun, Xiao Ling and veteran Shangri-La Wines. (For more on this region, check out this post, this post and this post from my November trip.)

Anyway, as with all of China’s regions, it will be interesting to follow how the scene develops, given how quickly policy can change. Xige, for example, arose during a swerve in Ningxia’s wine strategy. As I wrote in “Coop d’etat: Pigeon Hills symbolizes new shift for Ningxia” in 2018:

“Many trade visitors to Yinchuan have heard the “small winery, large area” spiel in recent years, the idea of settling a 200-plus kilometer north-to-south swath of Ningxia with boutique operations. There are at least 86 functioning wineries there now, most of them small, many racking up medals at contests here and abroad.

“Pigeon Hills is not part of that. The powers that be, concerned those medals haven’t meant much higher sales, saw the need for some big leading brands, too. Pigeon Hills has risen from the dust in less than a year with 10 million liters of tanks, a fermentation capacity of 6,000 tons and cutting-edge equipment.

“Call it an attempt at a Chinese Penfolds, at a widely-known brand that consumers trust — and trust is a key issue for local producers as they get crushed by imports — and that makes both top-flight labels and large amounts of inexpensive wine for middle class buyers.”

Check out the full post here, which includes a barrel / tank tasting of the first wines even as the winery was under construction and some background on the area, including how the first vines were planted the same year as the visit of a Fujian official, on an anti-poverty mission, who would rise a few decades later to become the leader of China.

My post about Gen Z and wine in China just got published on Wine Searcher. It’s hard to cover the topic in just 1200 words, especially as about the only thing most people have figured out is that Gen Z is hard to figure out.

But with 260 million people and a unique history — it grew up with the rise of social media, e-commerce and an economy that knew but strong growth until recently — it is a spending force that will increasingly influence the wine scene.

A few quotes from the article, with the full version at this link:

“We are a generation that witnessed major shifts on all fronts of society in a very short period, so we are more accustomed to and welcoming of new products and concepts. Just within the alcohol industry, we saw the emergence of RTD (ready-to-drink), including zero-sugar low-alcohol drinks, canned wines, tea-infused alcohols, and so on.” — Andrea Leng, Chanson Winery

“They want to try every wine, no matter Chinese or imported, from big wineries or small ones, from orange wines to screw caps. They decide what wines are good compared to years past when students tried to learn what is good.” — Professor Ma Huiqin, China Agricultural University, on students in her introduction to wine class

“[Gen Z] grew up with social media. They don’t follow the traditional wine critics or wine professionals. They like to create their own communities and they like to follow people speaking their language.” — Terry Xu aka ‘Xiao Pi’, leading wine KOL

“We have a substantial percentage of young and female consumers for our brands, perhaps because of the more novel forms of wine products we are providing, like bag in box, ready-to-drink mulled wine and the wine punch series called ‘juice wines’.” — Wang Shenghan aka ‘Lady Penguin’, leading KOL

“We are preparing a big five-year promotional plan for this generation, which includes pairing Chinese cuisine from different cities with local and international varieties we cultivate in Greece. I believe this generation will change all of the wine market in China because their consumption is real.” — Liakos Constantinos, Greek wine importer Hellenic Agora

For more, including the kinds of wines Gen Z tend to pursue, read the full article here.

More than 1300 days after China Alcoholic Drinks Association (CADA) spearheaded an inquiry into Australian wine imports, that led to tariffs of over 200 per cent, the relationship between China and Australia might soon return to what I have heard some trade people call ‘normal.’

Numerous media reports, including this one, this one and this one, indicate that China has drafted a proposal to end the tariffs, with a final decision expected in the coming weeks, which fits snugly with Australia’s invitation to Chinese Foreign Minister Wang Yi to visit in late March.

Eight thoughts about this situation.

‘Normal’

‘Normal’ suggests a prolonged period with a standard pattern, something that is hard to find anywhere in Australia’s tumultuous romance with China’s market.

Consider a dozen years ago: Australia’s best-case scenario was generally seen as a bridesmaid to France, then with a seemingly ‘insurmountable’ lead in imports. In 2011, for example, France’s wine imports were over 350% higher than Australian ones, both by volume and value.

Then, Australia caught the bouquet, in the form of a free trade pact with China in 2015, thus delivering it a key advantage versus other suitors of Chinese wine consumers. A few years later, it was Australia’s ‘big day’ as it reached USD1 billion in year-on-year in wine imports, the top spot in the market.

But rocky times soon appeared as, starting in 2020, the COVID crisis devastated a wine scene where sales are often dependent on socializing, such as business dinners and banquets, with Australia also upsetting China with comments re that country’s possible role in the global health crisis.

Finally, the ‘divorce’, as the complaint by CADA–which has now turned its attention to European brandy–led to those tariffs, in turn, Australian wine imports falling to near zero.

Now, it seems the couple might get back together, and there are lots of things to consider.

Peak Australia

Peak Australia was just before the COVID crisis hit, when import value topped USD1 billion and the sky seemed the limit. Australia was leveraging its good reputation for food safety, quality products and, in terms of wine, ‘bottled sunshine’ plus its familiarity with Chinese tourists, students and workers.

Wine Australia’s China office–now closed–was active with high-profile tastings, wine forums, trade fair activities and other promotion.

And Chinese investors in Australia’s wine industry, in some cases inspired by gaining residency, shipped production back home and helped boost those import numbers.

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Peak Penfolds

That time might also be called Peak Penfolds, as that and other brands from parent company TWE had a substantial slice of the market. As I posted just before COVID broke, inside sources pegged TWE’s shares of Australian imports in China at 30% to 40% by value and 10% to 15% by volume.

Consider January to August 2019: TWE sent an estimated 10.3 million liters out of Australia’s 82 million liters of bottled wine, ranking it sixth among *countries*, with double the volume of the United States or Portugal, and 40 percent of Italy’s share. Or as much as South Africa, Argentina and Germany combined.

The value numbers were even more stunning. A 35% slice meant a huge USD194 million of Australia’s USD553 million in imports, the same as Chile, roughly double Italy or Spain, and eight times more than the United States.

And one claim that Penfolds share was much bigger pushed those numbers much higher.

The gap between volume and value also meant TWE / Penfolds was responsible for Australia’s overall high value per bottle.

Full Cupboard

The post-tariff years revealed just how much excess Australian stock was in the market. Reports of more than 100 full containers of wine at Customs / in storage persist. And it’s just one viewpoint, but I can still find Australian labels on shop shelves in my neighborhood.

Of course, some bigger Australian brands needed to take action.

Penfolds launched its ‘One’ series, with wines from China, France and the United States. Others, such as Jacob’s Creek and YellowTail, turned to South America to fill up bottles–I wonder how many consumers realized the wine inside was not from Australia?

Hardys, using South African wine bottled in China, sells at a discount shop in my Beijing neighborhood for RMB19.9 / USD2.80 per bottle.

In other words, the goodwill built by Australian wine was in some cases reduced to the brand name on the bottle rather than what was inside it.

Persistent Penfolds

At the same time, TWE / Penfolds remained active in China: organizing product launches, working with KOLs / marketing mercenaries, importing its French and U.S. labels and awarding scholarships at Chinese universities. Penfolds also released a wine using Cabernet Sauvignon from Yunnan and Marselan from Ningxia named CWT 521, with critic Shuai Zekun of jamessuckling.com ranking it number 99 in the top 100 China wines.

TWE also partnered with CADA, making a “long-term, multi-faceted strategic co-operation agreement” with the organization enabling the tariffs in the first place.

Reportedly, TWE has loads of stock ready to push into the China market. Perhaps, it can recapture the romance of the good old days, when Penfolds was seen as a status buy / dependable luxury gift by people who knew little else of wine — who remembers Bin 620! Maybe Lu Yang, the winner of the first Penfold’s China Sommelier Competition, and other big-name KOLs can help!

‘New Normal’

And perhaps not. The China wine market looks significantly different compared to three and a half years ago. As I wrote about the 2023 import stats:

“The bad news is bottled wine imports in China fell 17.6% by value and 29.1% by volume in 2023, a year we hoped would deliver a big rebound after three years of ‘zero-COVID’ restrictions from 2020 to 2022.”

“The really bad news is this crash isn’t part of a similar disaster for imported alcohol in general, as both spirits and beer performed far better, and that underscores that wine faces a particularly serious crisis.”

At a deeper level, the struggles of the China wine market go back much further. In a recent Grape Wall newsletter, I covered local production from 2008 to 2023: “output fell 89.6%, revenue fell 87% and the number of producers fell 58.5% from their highest points over the past 15 years.”

What we see now is both the imported and local wine trade falling further behind craft beer, spirits et al, with much of this due to falling status-based buying for gifting and business entertaining and banquets, usually for the big red wines for which Penfolds / TWE and other Australian producers are known.

Wakeup Call

This situation has been a wake up call for China’s producers. When the tariffs hit, I heard some claim that the tariffs were a golden opportunity, namely, a chance to fill the vacuum left by Australia and give local wines their supposedly rightful place. Of course, France, Chile and others also had this idea of grabbing that share.

The big revelation is how all of these competitors are focused on redistributing China’s shrinking wine market rather than growing it.

As wine loses ground to craft beer, whisky, brandy and [fill in the blank], the trade at large needs to focus on attracting consumers of such products rather than redistributing the small group of followers they do have. Fortunately, we do see a growing niche of importers and producers who realize this.

Wakeup Call 2

This should also be a wakeup call for Australian producers. They remind me of many who are lured by the prospects of a huge market but who find, after putting in the blood, sweat and tears, the payoff is much smaller than anticipated, if they receive any payoff at all.

Yes, Penfolds may do well once the tariffs lift, given its financial strength and ability to appeal to the status-based buyers out there. But most will have to adjust their strategies and their expectations substantially as they rebuild a market share many feel they never should have lost in the first place.