Chinese wine market acquisition on the cards

By Jennifer Phang

- Last updated on GMT

Related tags: Wine, China

Domestic Chinese producers aim for greater wine market share
Domestic Chinese producers aim for greater wine market share
China Tontine Wines Group, one of the largest wine producers in China, is looking to expand its current offerings with its intended acquisition of Yantai Baiyanghe Winery.

Yantai Baiyanghe was founded in 1958 and is located in Qixia City along Baiyang river in Jiaodong Peninsula, Shangdong Province. The winery produces 80 varieties of wine products including grape wine, brandy, and rice wine.

Management from China Tontine Wines Group told Food Navigator-Asia that the acquisition would bring about integration of both product lines and wine making technology when the deal was completed.

China Tontine Wines Group is among the top 10 wine producing companies in China.

Currently, sales of grape wine account for 90% of total products and for about 80% of domestic demand.

China Tontine Wines is hoping to expand its high-end grape wine and imported wine portfolios to its customers. Indeed, upgrading the quality of locally produced-wines is one of the key priorities of local wine producing houses in China.

Most premium grape wines are imported from the likes France, Australia and Italy.

Chinese domestic production

The main grape growing areas in China are situated mainly in Shandong, Hebei, Ningxia and Xinjiang provinces.

Similar to international wine development experience, China's wine companies are mostly located close to grape supply areas. Local grape wine producers are eager to gain market share. Among the top 3 Chinese wine brands, Chang Yu has 71,000 acres of vineyard in Shandong Province and 30,000 acres in Ningxia Hui Autonomous Region.

However, China's grape ingredient supply is relatively scarce, which has created a high entry barrier for the wine industry, so only companies with strong resources can achieve stable developments.

New vineyards springing up

Many wine experts believe that the China grape wine market is one of the rosiest in the world, and will continue to grow at a healthily rate. As a result, the Chinese wine market continues to attract local producers as well as foreign companies in terms of establishing new vineyards.

Wine consumption in China has been growing steadily at a rate of about 19% in the recent years and is expected to be the 6th largest wine consuming country in the world by 2014, according to research from Vinexpo.

And an analyst from International Wine & Spirit Research (IWSR) felt that access to the fastest growing market in the world and the current low per capita consumption of wine meant that there are huge opportunities for the future of the Chinese wine industry.

And coupled with an expanding middle-class, an analyst from IWSR maintains that the future of the Chinese wine industry is bright. However he warned that it would take some time for the Chinese wine industry to mature due to the time needed for local vines to bear fruit.

Related topics: Markets, East Asia, Industry growth, China

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