Market Changes and Alcoholic Beverage Trade in China
China is the most populous country in the world, with some 1.3 billion inhabitants. Likewise, China is a large agricultural and industrial producer with one of the most dynamic economies in the world. This article explores the changing tastes within the Chinese consumer class in urban centers and its effects on imports.
Market Changes and Alcoholic Beverage Trade in China
The Chinese society is undergoing a major socioeconomic transformation. As the country becomes increasingly urban, concentrated in the large coastal cities, such as Hong Kong, Hangzhou, and Shanghai, the middle class is growing. At the same time, China is experiencing a generational transition. Younger generations of cosmopolitan citizens with varied and refined tastes are now massive consumers breaking with some traditions and demanding a wider variety of goods. At the same time, the global economic slowdown that ensued from the 2008 financial crisis has significantly affected the manufacturing and export economies of the Asia Pacific region, particularly China. Because global demand and exports have gone down, the economic planners in Beijing have decided to empower the domestic market so they do not have to sacrifice manufacturing and industrial output.
These dynamics have led China’s majority urban consumer class to become an additional motor to an ever more important share of the national economy. This decision has prompted the rise of a consuming and financial empowered middle-class. In turn, retail sellers have been forced to cater their offering of consumer goods to a diversified domestic market with more varied and sophisticated tastes. Therefore, the import of high end and niche products into China has increased substantially over the last several years. Interestingly, the import of alcoholic beverages to southern China between 2013 and 2015 has more than doubled, particularly when it comes to wine and beer. When compared to 2015, the first eight months of 2016 show a 35% increase in the value of wines imported and a 16% increase in terms of the value of beer imports.
Even though China is the largest consumer of beer in the world, it is also the largest producer and distiller. Therefore, imported beer has a hard time finding market entrance opportunities and only represents a small share of Chinese consumption as of today. However, the percentage of imported beer consumed in China has been growing steadily over the last several years. In the case of wine, this alcoholic beverage has gone from being considered a luxury item to a drink for occasions that are more casual. Within China the southern and eastern regions are those that most consume alcoholic beverages.
Wine is mostly imported from France as well as Chile and Australia, two countries that have free trade agreements with China. Approximately 49% of all alcohol wine imports are destined for the southern region, while 37% of imported wine is destined for the eastern provinces. In terms of beer, Fujian province, in the south, is the largest importer and most beer imports come from the European Union, particularly Germany, the Netherlands, and Spain.
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