China’s Wine and Spirits Market (1): Wine Consumption Trends and Habits

Today, as drinking wine has become part of the daily life of many mainland consumers, China is tipped to become the world’s second largest wine consumer by the year 2023 by some industry estimates¹. According to a survey conducted by HKTDC Research², 41% of the mainland respondents drink wine at least once a week. Red wine is the most popular, with 94% of respondents having purchased or consumed red wine in the past year, followed by white wine (35%), and champagne/sparkling wine (25%). There is a general belief that drinking wine is good for health, with 54% of respondents saying this is why they buy and drink wine, the most popular of all the reasons cited. It is interesting to note that Covid-19 has not made a significant impact on the drinking habits of wine consumers in China. A large proportion of respondents (42%) reported that their frequency of drinking wine was more or less the same as before. The survey shows that wine drinking has already become a firm habit among mainland wine consumers and is unlikely to change in the near future.

Better Informed Consumers

Survey respondents were asked how much they knew about wine and how they would rate themselves: as a beginner (with limited knowledge of wine, who would take other people’s advice before making purchase decisions), intermediate (with some knowledge of wine and an interest in learning more), or connoisseur (with years of experience and an in-depth knowledge of wine). Among all the respondents, 75% rated themselves as beginners, 24% as intermediate and the remaining 1% as connoisseurs.

Those in the age group 36-45 were most knowledgeable about wine, with 28% identifying themselves as intermediate. A similar proportion of female respondents as male rated themselves intermediate. This shows that a significant number of female wine consumers on the mainland would like to learn more about wine. The respondents’ knowledge of wine did not vary markedly with monthly household income or with city of residence. According to the survey, the majority of mainland wine consumers are still beginners, but the number of more sophisticated drinkers is gradually growing across the country. These people treat tasting and learning more about wine as a lifestyle choice.

The More Wine Knowledge the Higher Drinking Frequency

According to the survey, 41% of the respondents drank wine once or more a week. The frequency of their drinking was in direct proportion to their knowledge of wine. Among the beginners, the majority drank wine occasionally, with only 21% of them consuming wine once or more a week in the six months prior to the survey. By comparison, intermediate respondents drank more frequently, with 95% of them consuming wine once or more a week in the past six months. The biggest difference between beginner and intermediate drinkers was how often they drank wine. A respondent at the focus group said: “I think learning about wine is a process. At first, I saw wine as one of many drinks, but gradually as my taste buds have adjusted to the taste of wine, I wanted to know more about the wines and their background. I also began to join groups of wine lovers and attend wine tasting events.”

More respondents aged 36-45 rated themselves as intermediate, and they also drank wine more often. Among this age group, 45% consumed wine once or more a week during the six months prior to the survey, higher than the 36% of their counterparts aged 26-35 and the 39% of those aged 46-55. The frequency of wine drinking was more or less the same for respondents of different gender, different monthly household income, or different city of residence.

Red Wine is Most Favoured

Among all types of wine, red wine was purchased and consumed by the largest number of respondents, with 94% of them saying that they had bought or consumed red wine in the past year. White wine came second, at 35%, while champagne/sparkling wine and rosé were consumed by fewer people, accounting for only 25% and 13% respectively. It was suggested that red wine took the lion’s share because there were more wide-ranging occasions for drinking red wine. A participant at the focus group said: “I usually drink red wine when I have dinner at Western restaurants. I would only drink champagne on certain celebratory occasions, such as promotion parties. You can’t beat the boisterous atmosphere created by the bubbles gushing out from a bottle of champagne when it is opened.”

Although red wine occupies a dominant position, white wine is beginning to win the heart of certain consumer groups. Among respondents in the 26-35 and 36-45 age groups, 38% and 36% respectively had purchased or consumed white wine in the preceding year, higher than the 32% of their counterparts aged 46-55. In terms of wine knowledge, 40% of those at intermediate level indicated that they had purchased or consumed white wine in the past year, a proportion higher than that for beginners (33%).

Champagne and sparkling wine are currently more popular with young consumers and higher earners. Among respondents in the 26-35 age group, 28% said they had bought or consumed champagne or sparkling wine in the previous year, a higher percentage than that of their counterparts aged 36-45 (26%) and those aged 46-55 (22%). In terms of income, 30% of the respondents with a monthly household income of RMB30,000 or above had purchased or consumed champagne or sparkling wine in the previous year. For respondents with a monthly household income of RMB20,000 or below the percentage was 21%, while those with a monthly household income of RMB20,000-30,000 it was 28%. The type of wines preferred by respondents of different genders or residing in different cities was more or less the same.

Health Factor Drives Wine Consumption

The notion that wine is good for health is deeply rooted in the minds of mainland consumers. 54% of the respondents said that this was the reason why they purchased and consumed wine, the highest percentage of all reasons cited. This notion was particularly common among the older respondents. Among respondents in the 36-45 and 46-55 age groups, 59% and 55% respectively named “drinking wine is good for health” as their reason for buying and consuming wine, higher than the 47% of their counterparts aged 26-35.

Other major reasons for purchasing and drinking wine were “the expression of a tasteful life” (39%), “taste preference” (37%), and “relieving stress” (37%). One participant in the focus group remarked: “To me, enjoying the sunshine on a terrace in a sunny afternoon with a glass of wine in hand and a pleasant scenery in front is enjoying life in a tasteful way.” Another respondent said: “My job is rather tedious, drinking wine before going to bed can relieve me of the day’s fatigue.” Apparently, nowadays many mainland consumers drink wine for personal reasons and not just to socialise.

Although socialising was not the main reason given by mainland consumers for buying and drinking wine, the proportion of male respondents purchasing and consuming wine as a form of social etiquette was higher than that of their female counterparts. 34% of the male respondents named social etiquette as the reason for purchasing and consuming wine, a higher percentage than the 22% of female respondents. A male respondent pointed out at the focus group: “To me, wine can bridge the gap between people and is something indispensable in promoting human relations. Drinking wine with friends at a gathering can improve friendship, and drinking with business clients during a meal can make the process of business negotiation smoother.” As for women, they saw wine as a beauty drink, with 43% of the female respondents purchasing and consuming wine for beauty reasons, a percentage much higher than that of their male counterparts (10%). The reasons for buying and drinking wine given by respondents with different monthly household incomes, different levels of wine knowledge and residing in different cities did not vary significantly.

Female Consumers are Loyal Wine Drinkers

In addition to wine and spirits, the main subjects of this survey, consumers also drank other alcoholic beverages. The wine drinkers surveyed had consumed beer (54%), followed by Chinese white spirits (36%) and Chinese yellow wine (17%) in the past six months. 11% of the respondents had consumed other types of imported liquor (e.g. fruit wine, soju, sake), while the percentages of those having consumed ready-to-drink alcoholic beverages (8%) and tonic wine (7%) were rather low.

Compared with their male counterparts, female consumers seldom drank alcoholic beverages other than wine and spirits. Only 37% of the female respondents indicated that they had drunk beer in the last six months, a much lower percentage than the 62% of the male respondents. The proportion of female consumers drinking Chinese white spirits and Chinese yellow wine also followed the same pattern, with only 18% of them having consumed the former and 10% the latter in the past six months. Both percentages were much lower than that of their male counterparts at 44% and 20% respectively. The proportions of female respondents consuming other imported alcoholic drinks (13%) and ready-to-drink alcoholic beverages (11%) were slightly higher than that of their male counterparts at 11% and 6% respectively. Overall, the proportion of respondents consuming these two types of alcoholic drinks was low. The above findings show that mainland female wine drinkers seldom consumed other alcoholic beverages and their loyalty to wine was high.

Drinking Habits Unaffected by Pandemic

In early 2020 when Covid-19 hit China, most of the restaurants and offline retailers across the country were closed in compliance with infection control measures implemented by the government. However, these measures did not have a great impact on the wine drinking habits of consumers. According to this survey, the majority of respondents (42%) indicated that their frequency of drinking wine during the pandemic was about the same as before Covid-19. The proportions of those saying that their frequency of drinking wine had slightly increased (25%) and those saying their frequency had slightly dropped (22%) were close. Only a small number of respondents said their frequency of drinking wine had increased significantly (6%) or decreased significantly (5%). The wine drinking frequency of respondents of different gender, age, income, wine knowledge, and location remained pretty much the same during and before the coronavirus pandemic.

In the midst of the Covid-19 crisis, when almost all offline retail stores were closed, the majority of mainland wine drinkers still managed to drink as much wine as before the pandemic. This shows that their wine drinking habits have a certain resilience. Although consumers could not go out to buy wine or have dinner with friends at the height of the crisis, they could still consume their stock at home or make purchases online. To mainland Chinese wine consumers, drinking wine has become a part of their life, and this is unlikely to change in the near future.

Positive Market Outlook Post-Pandemic

Although the Covid-19 pandemic has dealt a heavy blow to the global economy, the post-Covid-19 wine market in China is expected to remain steady. In this survey, the majority of respondents (81%) indicated that in the days to come the types of wine they expect to buy or consume will be more or less the same as presently. 64% said their frequency of drinking wine would be about the same, and 60% believed the grades of wine they would purchase would also remain about the same. Apparently, the coronavirus crisis has not shaken the foundations of China’s wine market. It is worth noting that 25% of the respondents said they would in future buy higher quality wine, while only 15% pointed out they would buy lower quality wine than at present. At the same time, more respondents (21%) indicated that their frequency of drinking wine in future would decline, while 15% said that it would increase. This suggests that in the days to come, consumers may adopt a “less frequent, higher grades” strategy in purchasing wine. In other words, they will drink wine less frequently but buy wine of higher quality and price.

Moreover, due probably to the fact that consumers had gained more experience in buying wine online during the pandemic, 52% of the respondents said that to purchase wine in future they will consider both online and offline channels. 31% of them even said that they will make more purchases from online channels. It can be expected that online wine vendors will have more buyers in the days to come.

Compared with other cities, respondents in Guangzhou (22%), Shanghai (21%), Beijing (23%), Chengdu (20%) and Xian (21%) had the greatest interest in buying more varied types of wine in the future. This reflects that people residing in these large cities are more curious about imported foreign wines. A significant proportion of beginners (20%) also showed interest in buying more types of wine in future, more so than their counterparts at intermediate level (16%). Where the grades of wine are concerned, more respondents of an older age would buy higher grade wine in future. 29% of those in the 46-55 age group said they would buy wine of higher grades in the days to come, a percentage higher than the overall of 25%. This indicates that in future, older consumers are likely to be the main buyers of fine wine.

Conclusion

Wine dealers wishing to sell wine to mainland China are facing an increasingly mature market where about one quarter of the wine consumers have a degree of knowledge about wine and drink wine frequently. Many consumers see drinking wine as part of their daily lives. Even while the coronavirus swept through the country, consumers did not change their wine drinking habits significantly. In the light of this, wine dealers tapping the mainland market should offer a range of wine types, of different quality and price, for customers to choose from. This would allow consumers with different levels of wine experience to pick the most appropriate wine for their lifestyle.

This survey found that women constitute an important consumer group. Female drinkers are not only on a par with their male counterparts in terms of what they know about wine and how often they drink, they are also loyal wine lovers. Wine dealers who give more thought to promoting wines tailored to female drinkers can expect good results.

¹ Source: Vinexpo and IWSR

² See Appendix for background information on this consumer survey.

Appendix

Survey Background

Mainland China is one of the world’s fastest-growing markets for wine and spirits. As the Covid-19 pandemic continues, it has also been one of the few regions where economic activity has been able to recover within a short time. The mainland’s retailing and catering sectors have been developing rapidly in recent years, and as they are likely to grow continuously after the pandemic is under control, the chances are that sales of wine and spirits will be sustained in the future.

Since the removal of wine duties in 2008, Hong Kong has become a trading hub for the industry in the Asia-Pacific region. Not only is there a full range of wine-related services available in Hong Kong, but wine traders can also benefit from customs-facilitation measures when importing wine to the mainland through the city. With the mainland wine and spirits market developing apace, more business opportunities are in store for Hong Kong. In view of this, HKTDC Research conducted a consumer survey on the mainland’s wine and spirits market to grasp some knowledge of the mainland middle class’ demand characteristics, spending mentality and purchase preferences for wine and spirits, in order to help Hong Kong companies understand this market and expand their businesses on the mainland with a more targeted approach.

Methodology

The survey carried out in May 2020 polled 1,440 mainland wine and spirits consumers by online questionnaire. Six online consumer focus group discussions had earlier been held in Guangzhou, Shanghai and Xian – two in each city – with the objective of taking an in-depth look at the spending mentality of mainland wine and spirits consumers.