Consumption of grape-based wines is higher than ever in the world’s most populous country, and California wine producers are looking to get a piece of the action. China’s wine consumption has increased by an astounding 12% annually between 2010 and 2014, far ahead of the second fastest growing wine market in Canada, which grew at an annual rate of just over 2%. China is also now the fifth largest producer of grape wine in the world, up from 15th in 2001.
The rise in popularity of grape wine among Chinese consumers is variously attributed to a growing middle class, perceived health benefits, and repatriating Chinese citizens bringing home acquired tastes from abroad. US wine companies, ranging from those with an established presence in China such as E & J Gallo to newcomers like Trinchero, see this as both an opportunity and a challenge. In contrast to the growing demand among consumers, Chinese austerity measures and a crackdown on corruption last year led to a drop in imports of foreign wine. To combat that negative trend, foreign companies have designed wines specifically for China. Some of these bespoke wines have gone so far as to feature tastes more familiar to Chinese consumers, such as smoked sausage or soy sauce. In March, US ambassador to China, Max Baucus, visited wine experts at the Wine Institute in Napa Valley and heard strategies to expand the California wine market in China, including a possible partnership with Disney featuring California wines to coincide with the opening of Shanghai Disneyland in 2016.
Though roughly 70% of the wine consumed in China is domestically made, per capita wine consumption in China is still relatively low, leaving lots of room for American companies to earn a greater share. China is now the world’s largest drinker of wine, imbibing more than twice as much as the next largest consumer, and California is well positioned to help meet the demand. Though all 50 states produce at least some wine, California makes roughly 90% of all US wine and produces the 4th largest quantity of wine in the world after Italy, Spain, and France. The state’s wine exports in 2014 were the second highest on record, at nearly $1.5 billion, and China is now the 4th largest importer of California wine, behind the European Union, Canada, and Japan.
With China’s demand for wine projected to continue climbing, innovative marketing and consumer outreach by American vintners can help ensure that US wine earns a strong place in that market.
Lincoln Lin is a Research Intern at the East-West Center in Washington and a graduate student at the Johns Hopkins School of Advanced International Studies.