Nimbility’s View on H1 2018 in China: “Is the Chinese Wine Consumer Trading Up?!"

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In most of the large wine markets in the world, 5% volume growth YOY would be strong, but for China this is a slowdown. France, still the powerhouse it has been, lost more volume in the first half than the USA or South Africa shipped entirely! The bright side is that average prices are up across the board leading to growth in value terms of over 20% YOY for the total category. Could Chinese consumers across the board be trading up? Are consumers moving from OEM products to true brands at somewhat higher prices?

Some initial insights from Nimbility’s Founding Partner Ian Ford:

  • Every country on the list has increased average price to China, a strong indicator that Chinese consumers are upgrading their choice of imported wines, or that some brands and importers are successfully “premiumising” - or both.

  • France has declined in volume YOY, although up 13% in value, reflecting a continuing trend of share loss to Australia, Chile and other new world countries.

  • The Treasury effect: TWE’s aggressive push continues with Australian and USA brands and has contributed to strong H1 shipment results for these two countries, in both volume and value.

  • South Africa tops the table in terms of growth rate, in both volume and value – can this be sustained, will South Africa claim it’s place alongside other new world leaders? A strong leading brand has yet to emerge.

  • One theory: The downward price pressure resulting from e-commerce price transparency has actually made wines more affordable across the board, leading to a move up the price ladder by Chinese consumers generally. 

Disclaimer: these numbers only represent shipments to China, not depletions or sales or consumption in the market directly. We believe strongly in a corollary between shipments into China and trends in the market, but there is a long time lag between the two, and there can be distortions between shipments and consumption at any point in time.

Chess Martin