China's shifting preferences impact Australia's wine exports

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Shifting Consumer Preferences Impacting the Chinese Wine Market

The Chinese wine market is undergoing a significant transformation, driven by changing consumer preferences and evolving tastes. Younger consumers are increasingly favoring healthier, low-alcohol beverages, which has led to a decline in traditional wine consumption. This shift has had a noticeable impact on Australia's wine exports, particularly to China, which was once its largest market.

According to a report from Wine Australia, shipments of Australian wine to mainland China fell by 17% year-on-year in the previous year, reaching A$755 million (US$532.10 million). This decline was the primary factor behind an 8% drop in Australia’s total wine exports. Despite the removal of tariffs that had previously reached up to 218.4%, the market has not rebounded as expected. In fact, the Chinese wine market has shrunk significantly over the past five years, with annual consumption falling by about 47% between 2021 and 2024.

Peter Bailey, manager of market insights at Wine Australia, noted that the Chinese market is now only one-third the size it was five years ago. He attributed this decline to weak consumer confidence and continued economic uncertainty, with only minor improvements in sentiment since the lowest point during the pandemic restrictions in 2022.

Australia's wine exports last year dropped by 8% in value to A$2.34 billion (US$1.65 billion) and 6% in volume to 613 million litres (161.94 million gallons). While China remains a major customer for Australian wine, the country is diversifying its sources, with younger consumers showing a growing preference for domestic products and low-alcohol options.

Domestic Wines Gain Ground

Over the past five years, domestic wines have become the mainstay of the Chinese market. According to the China Alcoholic Drinks Association, their market share rose to approximately 55% in 2024. This trend reflects a broader shift towards local production and a move away from imported wines.

New Zealand wines, though holding a smaller share than their Australian counterparts, have seen strong growth in the Chinese market. Sales of sauvignon blanc, a light-bodied white wine, have been particularly popular. According to New Zealand Wine, the organization representing the country's grape and wine sector, the volume of wine exported to China increased nearly 50% last year to 5 million litres (1.32 million gallons), while the value of shipments rose about 30% to US$44 million.

This growth is attributed to the increasing demand for easy-drinking, approachable wines, as highlighted in an article posted on New Zealand Wine’s WeChat account.

Changing Tastes Among Younger Consumers

The market is also being reshaped by younger generations, particularly Gen Z. The Shenzhen Wine Industry Association recently released a market analysis stating that the wine industry, once a symbol of elegance and tradition, is now being disrupted by young people. Consumers in their twenties are seeking mild intoxication rather than inebriation and prefer low-alcohol products over traditional wines with higher alcohol content.

This shift has led to a decline in the appeal of imported wines among younger consumers, who are more open to domestic alternatives and health-conscious choices.

Economic and Market Trends

Chinese customs data shows that total wine imports fell by about 26% by volume and 10% in value last year. However, the average import price rose by more than 21%. This indicates a shift in consumer behavior, where quality and affordability are becoming more important factors in purchasing decisions.

As the Chinese market continues to evolve, both local and international wine producers must adapt to these changing dynamics. The focus on health, personalization, and low-alcohol options suggests that the future of the wine industry in China will be shaped by innovation and consumer-driven trends.