Fast-Rising Import China-Growth of imports improving prospects for foreign wine, beer and spirit producers
Fast-Rising Import China-Growth of imports improving prospects for foreign wine, beer and spirit producers
China is considered an exporting powerhouse and sees Growth in Imports in 2021. With new patterns and changing behaviour, it is hardly shocking that growth is expected to continue, despite a slight decrease of 0.9% in US imports due to Covid-19 in March.
Growth in China Imports is driven primarily by demand for commodities and consumer goods.
As Chinese consumers grow richer, their demand for higher quality products and services is also growing. Many are looking for foreign products because of continuing concerns among the Chinese about protecting domestically manufactured goods.
Especially true for alcohol consumption in China, many foreign countries import what they have to sell. Foreign brands constantly take market share away from existing domestic brands in spirits, beer, and wine. With this tremendous growth potential, Mersol & Luo implement localised expertise to achieve forward-looking strategies and avoid common risks and challenges to importing China into a worthwhile company.
In certain respects, the Government is leading to this development, as it is constantly reducing the rate of VAT, duties and tariffs on international products. VAT is decreasing, and the Chinese Government is showing a wider tendency to reduce the cost of manufactured products. Countries with which China now has free trade agreements—will profit more from this.
Opportunities for Wine, Beer and Spirits Producers in the Growing Market
Fast Rising Import Growth in North Asia
Wine is the most common form of Alcohol in China, with the country being the largest importer in the world. According to Chinese customs, 745.8 million litres of Alcohol were imported in 2017. The wine culture, which includes knowledge and understanding of wine, is growing, especially in large urban areas, although on a relatively low basis.
While France remains the single largest wine import source, this is changing rapidly as local customers grow accustomed to the quality and varieties of other regions and exporting countries, such as Chile, which benefit from free trade agreements, allowing higher price competition.
Spirits face tough competition from the nearby fiery spirit of China, Baijiu. Brandy accounted for 75% of all imported liquors in China in 2018, but other hard spirits have made massive inroads in the last few years. The number of brandy imports reached more than US$1 billion, a rise of 20.6 per cent from 2017. Whisky imports enjoyed a 27.6 per cent rise in value, while vodka and rum imports were worth US$16.7 million and US$7.9 million, respectively.
Fast Rising Import Growth in North Asia
China is the world’s largest beer market, with an annual intake of 46 billion litres. In terms of capacity, beer dominates the country’s total alcohol market, accounting for 75% of alcohol consumption. Growth in imports has also doubled in digits over the last five years, mostly dominated by European brewers such as Belgium and Germany.
Demand for different mass and craft beers is rising as Chinese consumers—usually young and urban—have developed a taste for IPAs, stouts and other traditional and new varieties and flavours. Imported beer to China has seen a steady increase in sales volume and value over the last five years.
All of these points to an enormous opportunity for international wine, spirits and beer makers, as China’s drinking culture changes from conventional swill to fresh, innovative, more aromatic and better-quality alcoholic drinks. While large urban areas – such as Shenzhen and Shanghai – are leading the way in the adoption of new trends, smaller cities have also begun to follow – Both are major potential markets for producers of all sizes searching for their next (or first) export market opportunity under the guidance of Mersol & Luo.
The key to successfully tapping, expanding and successfully importing Alcohol to China is always to find the right partners, such as Mersol & Luo, who understand the market, who can properly locate your branding and marketing strategy.
Export of goods to China
The overall value and growth of products exported to China-driven exports of resource commodities, particularly metal ores (mainly iron ore) and coal. In 2019-20, the export of iron ore accounted for 56% of all Australian products exported to China and was a major driver of exports between 2014-2015 and 2019-20.
After the start of the China-Australia Free Trade Agreement (CHAFTA), there has been a major increase in exports of other goods, including meat (in particular beef), medicinal and pharmaceutical products, and beverages (in particular red wine).
Export of goods to China
The overall value and growth of products exported to China-driven exports of resource commodities, particularly metal ores (mainly iron ore) and coal. In 2019-20, the export of iron ore accounted for 56% of all Australian products exported to China and was a major driver of exports between 2014-2015 and 2019-20.
After the start of the China-Australia Free Trade Agreement (CHAFTA), there has been a major increase in exports of other goods, including meat (in particular beef), medicinal and pharmaceutical products, and beverages (in particular red wine).
China Imports of Australian goods at the beginning of 2020 were reduced by 17 per cent and 12 per cent in January and February 2020, respectively, with decreases in exports of iron ore (lumps and fines) in line with supply disruption caused by Cyclone Damien.
From March 2020, exports to China rose to $12.7b, up 32 per cent in February, mainly driven by exports of iron ore. Exports to China remained strong throughout April, May and June, with record-high exports of iron ore to China in June 2020, adding to China’s second-highest exports of products.
Off the back of the June 2020 high, July 2020 exports declined, down 17%, with declines in exports of metalliferous ores (largely iron ore) and coal. Year-on-year, exports to China decreased by 16% in July 2020.
U.S.-China Business Information Summary
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