China’s economic slump has hit the premium imported wine market. As consumers cut expenditure, demand for European wines is cooling quickly, and key wineries’ sales have plunged. The days when anything would sell at any price in China are gone, and the shift to replacing spending with cheaper alcohol is hardening.

A view of a vineyard on the outskirts of Changchun, China. /Courtesy of TASS-Yonhap

According to the South China Morning Post (SCMP) on the 26th, local time, Marshall Xu, 30, a headhunter living in Shanghai, recently has been drinking low-priced wine at home instead of dining out more often. Xu said, “Dining out is burdensome, and if you compare prices on online platforms, you can easily find affordable wine.” The industry said this change in consumption patterns has spread not only among young people but also to existing wine enthusiasts.

According to Chinese customs data, China’s wine import volume peaked at 552 million liters in 2017 and then fell for seven straight years. Last year’s import volume was around 165 million liters, not even 30% of seven years earlier. In the first to third quarters this year, imports of wines from France, Italy and Spain fell 19.7%, 12.8% and 26.9%, respectively.

The mood was similar at an international wine & spirit expo held in Hong Kong. Matthias Saint-Marc, export area manager at French wine distributor Maison Le Star, said, “Before COVID-19, anything would sell in China, but now sales have dropped to less than half.” He noted that social distancing practices still linger, and spending on high-priced wines tied to dining out has not recovered.

Accordingly, some firms are seeking survival strategies by sharply cutting prices. Italy’s Madeit Group said it has begun selling some wines for under 20 yuan (about 4,100 won) per bottle. Spain’s Casta?o Winery also said the Chinese market is exerting strong price pressure, making a “value-for-money strategy” more important.

At the same time, shifts in Chinese consumers’ tastes have become clear. Younger people prefer sweeter, lower-priced wines, and even high-end wine buyers increasingly prioritize value for money. Wang Tailin, a venture capital partner in Shanghai, said, “I only buy within 300 yuan (about 62,000 won) and scour Costco and specialist sites to find the best product.”

At the same time, domestic Chinese wineries are growing quickly. Major producing regions such as Xinjiang and Ningxia, backed by government support, are accelerating quality improvements and exports, they said. China’s wine export volume for January–September this year rose 118% from a year earlier, with Hong Kong, North Korea and South Korea identified as major destinations.

Ningxia’s Mulando Winery said it is negotiating with importers in Japan, Hong Kong and Indonesia. The company said it is pursuing a market-segmentation strategy by selling mass-market wines at €3.5 per bottle and premium wines at around €16.

However, with Chinese consumers still favoring wines from France, Australia and the United States, some say it will take time for Chinese wines to gain a firm foothold in the domestic market. Industry officials said, “As long as China’s consumption downturn persists, a rebound for Europe’s premium wines will be difficult,” adding, “Homegrown Chinese brands are increasingly likely to reshape the global competitive landscape.”