Euro wine trade to China faces curbs

Published Jun 6, 2013

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Beijing - China's rapidly growing urban middle class has fuelled a boom in wine sales over the past decade and offered a lifeline to ailing European vineyards, especially in France.

That lifeline could be jeopardised if Beijing decides to impose tariffs on EU wines, analysts said Thursday.

“The EU countries were the first to introduce and import wines to China,” said Deng Yutian, general manager of importer and distributor Blue Beacon Fine Wines.

“The French government and district trading associations made collective efforts to promote their products, leaving Chinese consumers with a strong first impression,” Deng said, adding that other EU wine-producing nations were slower to enter the Chinese market.

“Countries like Italy produce wines that are equal in quality to the French wines, but their sales fall far behind,” he said.

France is Europe's biggest supplier of wine to China with exports last year reaching a value of 546 million euros (714

million dollars), according to European Commission data. Spain and Italy are also among the top exporters.

But China said this week that it would carry out an anti-subsidy and anti-dumping investigation into EU wine, a day after the commission imposed duties on imports of Chinese solar panels after finding evidence of below-cost selling by Chinese producers.

The Chinese investigation was a cause of “legitimate concern” to French producers, who count on new markets like China's to keep 500,000 people employed, the French Federation of Wines and Spirits Exporters said.

Overall, EU producers shipped 257 million litres of wine to mainland China last year, the EU statistics agency, Eurostat, said.

China was the third-largest consumer of EU wine outside the bloc, behind only the United States and Russia.

According to Chinese data, 68 per cent of wine imports come from the European Union.

If China imposes additional duties on EU wines, pushing up their prices, New World wines would gain market share, Deng said.

“The current tariff is around 47 per cent,” he said.

If the Chinese investigation concludes that EU wines are illegally dumped or subsidised, the tariff could increase to about 70 per cent, making EU wines “really too expensive,” Deng said.

China is already the world's largest wine market and remains the fastest growing market, according to London-based International Wine and Spirit Research.

Consumption in China rose by 142 per cent from 2007 and 2011 and was forecast to rise by another 40 per cent by 2016, the research group said in a report for the Vinexpo wine trade fair.

Online sales in China accounted for 27 per cent of total wine sales in 2011 and were expected to jump to 47 per cent in 2016 with sales at supermarkets also soaring, the Vinexpo report said.

Avoiding the cheaper wines offered by shops and online retailers, some wealthy Chinese wine drinkers and dealers travel to Hong Kong or Europe to buy high-end vintages.

One Chinese buyer flew to Paris for an auction of wine from the presidential cellars last week and paid 5,800 euros (7,500 dollars) for a bottle of 1990 Petrus, a rare Bordeaux.

Despite many other eye-catching Chinese purchases at international auctions in recent years, the biggest expansion of China's market is among cheaper wines.

The trend highlights a change in Chinese drinking habits in which more consumers are seeking out less expensive brands to enjoy socially and demand is not primarily driven by expensive imported bottles to show off at business functions, the China Daily newspaper said Monday.

A survey of about 1,000 Chinese consumers this year by London-based Wine Intelligence found that 69 per cent usually spent less than 200 yuan (33 dollars) on a bottle of imported wine.

The Bordeaux Wine Council plans to promote more affordable wines in China to raise demand among this segment of drinkers, the newspaper said.

“In previous years, Bordeaux wine was considered to be a symbol of social status and only suitable for high-end business banquets,” it said.

“There is a growing trend of drinking wine for pleasure rather than buying it primarily as a gift or serving it at banquets as a status symbol,” the newspaper quoted Maria Troein, the China

manager for the wine industry consulting firm Wine Intelligence, as saying.

Imported wines take about 40 per cent of China's 40-billion-dollar wine market, Deng said.

“But in the high-end market, the ratio rises to 90 per cent,” despite gradual improvement in the quality of Chinese wines, he said.

Deng said he expected the battle for tens of millions of potential new wine consumers to be intense, meaning higher tariffs would be a huge disadvantage for European exporters.

“Currently, 60 per cent of wine consumed is domestic wine,” he said.

“Especially in the low-end market, domestic wines take the lead and have great advantages in their (sales) channels.” - Sapa-dpa

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