China's Wine Market Shows Signs of Life

The first half of 2024 marked a cautious yet noticeable recovery in China's wine import market, reflecting a complex interplay between increasing demand, fluctuating prices, and shifting international relations. According to data from Chinese customs, the country imported 130.6 million liters of wine during this period, a modest increase of 1.8% compared to the previous year. However, the value of these imports surged by 25.6%, reaching 5.143 billion yuan, equivalent to approximately €656 million at the current exchange rate. This significant rise in value was driven by a 23.3% increase in the average price per liter, which reached 39.38 yuan (€5 per liter).

This upward trend in import value makes the first half of 2024 the most successful in three years, although the figures remain well below the peaks achieved in previous years. The Chinese wine market, once the fastest-growing globally, has experienced sharp declines since reaching its zenith in 2017. The recent growth, particularly in the second quarter of 2024, suggests a potential stabilization, if not a full recovery.

The notable increase in import value during the second quarter was primarily fueled by the resurgence of Australian wine, which had been severely affected by trade tariffs. In November 2020, China imposed tariffs of up to 200% on Australian wine imports, leading to a near-collapse of this once-dominant segment. However, the easing of these tariffs in March 2024, as diplomatic tensions between the two countries subsided, triggered a remarkable rebound. By the end of June 2024, Australia had climbed back to the second position in terms of import value, with purchases skyrocketing from 14.3 million yuan to 1.267 billion yuan. The volume of Australian wine imported also surged, from a mere 800,000 liters to 14.6 million liters.

The recovery was particularly pronounced in June, when China imported 8.9 million liters of Australian wine, valued at 788 million yuan. Notably, the average price of Australian wine also saw an impressive increase, reaching 86.51 yuan per liter—a staggering 384% rise and the highest among the top ten suppliers.

Bottled wine remains the dominant category in China's wine import market, accounting for 76.4 million liters (+0.3%) and 4.605 billion yuan (+30.2%) in the first half of 2024. This category alone represented nearly 59% of the total volume and 90% of the total value of wine imports. In contrast, bulk wine, which is the second most imported category, experienced a mixed performance. While its volume increased by 4.4% to 49.6 million liters, its value fell by 12.9%, reaching 266 million yuan. Sparkling wine also saw growth, with a 6% increase in volume to 3.1 million liters and a corresponding rise in value to 234 million yuan.

The bag-in-box segment, although relatively small in China, showed a decrease in volume by 12.8% to 1.4 million liters, while its value increased by 15.2% to 38 million yuan. The pricing trends varied across these categories, with bottled and bag-in-box wines seeing price increases of around 30% compared to the first half of 2023, while the price of sparkling wine remained stable. Bulk wine, however, saw a significant price decrease of 16.6%.

China's wine imports during this period were sourced from 48 countries, with notable shifts in the ranking of key suppliers. Chile maintained its position as the leading supplier in terms of volume, increasing its exports to China by 3.9% to 60.4 million liters. France, however, saw a 17.6% decline in volume to 25.4 million liters, placing it well behind Chile. Despite this drop, France retained its dominance in terms of value, with exports worth 1.84 billion yuan, although this represented a 2.5% decline from the previous year. The average price of French wine rose by 18.4% to 72.44 yuan per liter, while Chilean wine saw an 11.8% decrease in average price to 12.83 yuan per liter.

Italy surpassed Spain in volume, securing the fourth position with 8.5 million liters, despite a 6.6% decrease. Spain, experiencing a significant decline of 37.5%, fell to fifth place with 6.8 million liters. In terms of value, Italy also saw a slight decline of 5.7% to 384 million yuan, maintaining its fourth position. The United States showed a strong performance, increasing its exports to China by 5.6% in volume and 34% in value, overtaking both South Africa and Spain. South Africa, in particular, faced the most significant challenges, with its exports plummeting by 55.4% in volume and 35.7% in value.

The first half of 2024 has been a period of cautious optimism for China's wine import market. While the total volume of imports remains below historic highs, the significant increase in value, driven by rising prices and the return of Australian wine, suggests a market in recovery. The shifts in supplier rankings and the varying performances of different wine categories underscore the complexity of this market. As China continues to navigate its trade relationships and domestic economic conditions, the global wine industry will be watching closely to see if this recovery continues in the latter half of the year.