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Consumers raise a glass to cheaper wine
2015-01-05
By Ruby Gao

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A BOTTLE of Nederburg Foundation Shiraz-Pinotage from South Africa was recently selling for 96 yuan (US$15.50) in the upmarket City Super store in Shanghai.

Who would have ever guessed that imported wine, once such a luxury item in China, could fall within the reach of ordinary consumers?

Prices on overseas vintages are indeed falling, with many wine sellers offering bargains in the run-up to the Chinese New Year next month.

A bottle of Les Hauts de Clary 2012 from France was 55 yuan on yesmywine.com, Chinese biggest wine e-commerce provider.

For the past few decades, China has been promoted as the biggest emerging wine market in the world. Red wine chalked up record sales of almost 2 billion bottles in 2013 before the tide began to turn on wine imports.

China’s taste for Western wines has come on the coattails of rising disposable incomes and the trend of younger consumers to embrace Western products as chic.

China itself is a wine producer but in comparatively small quantities. In 1980, France’s Remy Martin set up China’s first wine joint venture in Tianjin.

Although some wines produced in China have won awards, the domestic labels haven’t managed to attain cachet status with local consumers.

In China, wine is popular among young women who drink and perhaps are seduced by the prevalent assumption that wine has fewer calories than beer.

After a decade of uninterrupted growth of around 25 percent annually, Chinese wine consumption started dropping in 2013, according to Vinexpo Asia-Pacific, Asia’s largest wine exhibition group.

The value and volume of wine imported to Shanghai in the first 11 months of last year fell, according to Shanghai Customs data. Volume dropped 2.6 percent to 110 million liters, while sales value shed almost a quarter to 5.04 billion yuan.

“I personally believe the market hasn’t reached bottom yet and will go down further,” Li Demei, a top Chinese winemaker and professor at Beijing University of Agriculture, said in Shanghai recently during a keynote speech at the ProWine China wine fair.

The decline, he said, is partially attributable to the Chinese government’s current anti-corruption campaign, which forbids public spending on banquets and gifts.

Much of the growth of the imported wine industry in the past depended on guanxi — the network of influence peddling greased by expensive gifts — according to Li.

“It’s time to restore rational order to wine consumption, which would be good for the longer-term development of the Chinese wine market,” Li said.

Stephan Li, a leading wine educator in China, agrees.

Pricking the price bubble will help spur healthy competition among wine producers, leading to less expensive wines on the market, he said.

Bargains fly in the face of high tariffs on imported wine.

Yellow Tail Shiraz, a popular Australian wine produced by Casella Wines, sells for 59 yuan on yesmywine.com.

At Dan Murphy’s, a major liquor retailer in Australia, the list price for a bottle is A$8.30 (42 yuan) Adding in a Chinese tariff of 48.2 percent, the online price of the wine in China shows the seller making a loss.

“Selling wine at a loss has become widespread in Chinese e-commerce,” said Charles Wu, president of online seller winekee.com. “There is a price war in the fight for market share.”

Like many sectors, the wine industry is susceptible to bogus merchandising.

“In some cities, you will find some fake ‘imported’ wines not made from grapes at all, but from alcohol blends disguised with aromatics and artificial sweeteners,” said Lu Mengxi, a popular wine writer in China.

In Shanghai and Beijing, a wine category called OEM — the industrial term “original equipment manufacturer” — accounts for many cheap imports.

“They’re made and imported legally, but are marketed under false pretences,” Lu said.

OEM wines are sometimes called “one euro” wines, referring to the price of the cheap wine in France. Some producers in the Bordeaux region source inferior grapes or grapes already pressed once and ferment them into wine, he said.

But once a French label is slapped on the bottles for the Chinese market, the wines can appear to be products often selling for between 50 yuan and 80 yuan. Since the labels are often exclusively for China, consumers here can’t compare prices in France.

“It’s price gouging,” said Roger Hou, co-founder of wineyun.com.

Li Demei said independent wine critics and educators can help the public with choices.

“Choose the right seller,” added Stephan Li.

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