Wine imports give Chinese firms a hangover

Chinese consumers' growing preference for imported wine is expected to pile further pressure on beleaguered domestic wine brands, according to industry analysts.

Imported wine currently accounts for around 25 percent of the Chinese market, industry analysts said.

The nation imported 200 million liters of wine in the first half of the year, up 12 percent year-on-year, with a value of $1.1 billion, up 24.1 percent, according to www.haiguan.info.

Wang Zuming, secretary-general of the wine branch of the China Alcoholic Drinks Association, said the rivalry between imported wine and domestic brands has never been so intense.

France, Spain, Chile, Australia and Italy are the major sources of China's wine imports, accounting for 82 percent of the total.

Between 2006 and 2010, wine imports grew from 114 million liters to 283 million liters, up 65 percent.

Zhang Zhigang, an analyst at Rising Securities, said domestic brands face challenges from foreign wine brands in terms of price and distribution.

Imported wines in China previously occupied the high end of the market but can now be found on the shelves of local supermarkets after their prices were lowered due to the global economic slowdown, posing a major challenge to domestic brands.

Given Chinese consumers' relative lack of awareness of foreign brands, their profit margins can be a lot higher than local brands, Zhang added. He predicted that imported brands will eventually account for around half of the Chinese market.

The impact of imported wines will be felt by the industry for at least three to five years, according to a report from China Merchants Securities. The report said China's wine imports have grown at an annual rate of 50 percent in recent years.

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