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Robert Russell: What one should know about wine expansion by Robert Russell09/07/2021  

Evolution of countries from spirits to wine drinking is not the same across the spectrum.

France, Spain, Greece, and Italy developed wine because the grape was food, and fermenting grapes was a way to expand the life of the crop, from a few months to a year or more.

Other countries with lesser climates became importers of wine, with the difference between the two groups being wealth. Over the last millennium England was an importer, with the exception of the occasional century or two when higher temperatures allowed it to produce wine of quality, not unlike the current climate that has made English white wines and sparklers, very competitive with the northern regions of France.

China has been a growth market for the last dozen years. The online journal, Chinese Wine Importers and Wine Import Trends 2020, noted that wine consumption projects to increase by 1/3rd over the next five years, and it has increased 80% since 2013.

China has been a growth market for the last dozen years. The online journal, Chinese Wine Importers and Wine Import Trends 2020, noted that wine consumption projects to increase by 1/3rd over the next five years, and it has increased 80% since 2013.


Preferred wines in China historically were Bordeaux and Burgundy. Some Spanish and Italian wine makers have made progress the last five years, and in the last year or so, South Africa has become competitive.

The heavy trade with Australia is on hold as both sides have issues, which are now heading to the World Trade Organization.

China is a health-conscious market; it prefers lower alcohol levels, and with over 900-million people accessing the internet daily, information on wine is very available. Wine purchases over the internet are a significant percentage of retail sales.

Wine is a social statement, and drinking nice wines socially affirms one’s class, allowing them perception as equals to the government officials, doctors, lawyers, and business owners, they respect as influencers.

Red wine is the preferred type, as it has some edge due to belief that it is the healthy wine. Shanghai is a center of red wine prestige drinking. Canton and Hong Kong are centers for cooler, lighter wines, fresh and fruity whites. Beijing is a market for expensive reds, but government officials mainly purchase them, as they have for many years.

Middle class drinkers in the capital are generally very frugal, and they prefer domestic wines in the $3 to $7 per bottle range.

In China, Amazon has joined Alibaba in competition for direct to consumer wine sales, a real success story, as the red tape and pass thru pricing for wholesaling, retailing, and restaurant sales add tremendous friction, estimated at 100-300% in some cases.

IWSC Market Insight: the Russian wine market, also online, studied the transition from a vodka-based drinking culture to one that is in transition as the younger capitalists are trending to fine European wines, and with the takeover of Crimea in 2014, the wine industry has a relatively good domestic production region.

One of the legends about vodka in the Soviet Union was that the tops of the bottles were non resealable aluminum foil, and once opened a bottle had to be finished. This encouraged alcoholism and other health issues. Their millennial generation considers wine as a healthier alternative.

The drinking of European wines dates back to the Tsars, stretching to the 1917 Bolshevik revolution, when the Communists took over, and in 1918 executed the royal family.

The revolutionaries continued drinking fines wines at the top, but the working class had vodka. Today in Russia, 60% of the population prefers wine, 36% vodka, and the balance in other beers and spirits. The majority of the wine drinkers are women, as in many countries.

To prevent the flow of money from Russia, the government banned wine advertising in 2013. Domestic wine can be advertized, but it is not typically. Wine sales are mostly retail in local stores, but restaurants sell the most expensive wines mainly in metropolitan cities like Moscow and St Petersburg.

There have been some inroads by international retailers, but the process is long and tedious. Only a few European majors are in the market.

When the Soviet Union crumbled in the early 1990s, we saw it as a decisive victory of capitalism over communism. The Russian wine market is today part political manipulation and part economic opportunism.

The lower prices for crude oil have stunted the meteoric growth of wine consumption that occurred over the last 8-10 years. COVID-19 has been an issue too.

One recently found a quote in Forbes Magazine, “Let China sleep, for when she wakes, she will shake the world,” as attributed to Napoleon Bonaparte.

If one had to bet on one of the two emerging wine markets, China is the choice.

Stay healthy, and Cheers.