Why Chile and its supply of bulk wine is the real hero of China’s demand for imported wine
One of the standout trends from the global wine trade this week was news that not only is China opening up more and more to imported wine, but that it is bulk wine that is really making the difference for some wine producing countries over others. The headline figures are particularly encouraging for the international wine trade considering the enormous potential that China still promises. For the first six months of this year wine imports in to China were up 34% by value and 22% by volume (OeMV).
This comes not the back of a hugely significant 12 months which as seen overall sales on imported wine leap 44% to account for 62 million cases, according to Impact Databank.
France continues to lead the way, which is not surprising considering it was China’s love affair with Bordeaux that first opened the borders to imported wine. It is now selling 19 million cases of wine in China, up 35% which is worth over $300 million in sales. But strikingly Chile is hot on its heels with a staggering17 million cases of wine sold in China in 2015. Striking because Chile does not have any long standing traditional trading routes with China and is nowhere near France in terms of sales in any of the major international markets it works in.
The key to its success has been bulk wine.
Chile has become the go to country for importers, distributors and retailers looking for easy drinking, palatable wine that can be shipped, bottled and sent right across the country. So successful has Chile’s bulk wine been in China that it now accounts for two-thirds of the 17 million cases worth of wine being shipped and drunk in the country.
Such is the revered nature that all French wine is regarded in China that only 1% of it is sent in bulk. The remaining 99% is shipped in bottle. That’s the way buyers and customer alike expect to receive their French wine. Which means that Chile is on the cusp of replacing France as China’s biggest imported wine country by volume. A situation that would have been unheard of three to five years.
It has clearly been helped by the trade agreement that is now in place between Chile and China. A similar agreement is also helping to boost Australian wine sales in to the country.
A trade agreement that saw imports of Chilean wine in to China first jump 37% in 2013 to 9.3 million. It has maintained that momentum to reach 17 million cases in 2015, and his hopeful of going through the 20 million case barrier within the next year to 18 months. Whilst Chile’s lack of image and identity has been seen as a disadvantage in other more mature wine markets, it has, arguably, been a major advantage and reason for its success in China. There is no real perception of Chilean wine in China. Providing it tastes nice and hits the right retail prices then it is ideally placed to be taken on.
The Chilean wine sector deserves a lot of credit for identifying the opportunity that China clearly now offers its producers. It has been able to target and re-direct wines suitable for Chinese drinkers.
Chilean producers have long been supporters of major international trade fairs in Beijing and Shanghai and Hong Kong. They have clearly listened and adapted their offer to suit the Chinese palate. Wines of Chile has invested huge amounts of its budget over the last four to five years to grow and develop the market in China. It spent in the region of $1.5 million between 2012 and 2014 alone, focused primarily on online advertising targeting younger drinkers. Wines of Chile’s managing director, Claudio Cilveti, told The Financial Times at the time: “We’re really looking to win over the 25- to 35-year-olds. China is a market that is just beginning to understand wine. The potential is great.”
It clearly has been true to its word and fully supported by major brands such as Concha y Toro that has seen an enormous increase in sale and interest in its wines.
It is also planning for the long term growth in China by investing in its wineries and planting extra grapes and vines back in Chile. In total Wines of Chile is expected to invest some $1.8 billioni between 2012 and 2020 in developing the Chinese market, and by planting up to 40,000 extra hectares of vines to cope with the demand. But where Chile goes others can follow. By demonstrating how successful a country can be based on its bulk wine offer is good news for other major bulk wine players like Spain and Italy.
So credit where credit’s due and it is to Chile where we should be raising our glasses for the success of imported wine in to China.