The evolution of foreign wine demand in China

Abstract

We estimate source-differentiated wine demand in China using the absolute price version of the Rotterdam demand system. Within the last decade, China has gone from obscurity to an important participant in global wine trade. The continual growth of Chinese wine imports suggests that a one-time structural shift approach may not fully capture how consumption patterns or demand preferences have changed over time. Thus, a rolling or moving regression procedure is used to account for continual adjustments in import demand patterns and to evaluate overall parameter instability. Our results confirm that Chinese consumers hold French wine in high regard and that French wine demand has consistently increased over the last decade, more than any other exporting source. Consumers in China have gone from allocating about 1/3 to over 1/2 of every dollar to French wine and the expenditure elasticity for French wine mostly increased while the market was expanding. Although Australian wine has a very solid standing in the Chinese market, results suggest that its market share will likely remain unchanged. Marginal budget share and expenditure elasticity estimates indicate that Australia will continue to account for about 20 per cent of the foreign wine market in China.

Chinese import demand for wine: evidence from econometric estimations

“…Recently, Muhammad et al (2014) estimated the Chinese demand for imported bottled wine using the absolute price version of the Rotterdam demand system. This study does not consider differentiated categories of wine (red/white or still/sparkling/bulk), which are relevant for both consumer choice and country competitiveness.…”

In Vino ‘No’ Veritas: impacts of fraud on wine imports in China

“…Domestic producers in China have supplied various forms of tainted wine where water, sugar and other substances are added to bulk wine prior to bottling (Coffey ; Dordevic et al ; Muhammad et al ; Wilkes et al ). Counterfeiting also occurs with reused labelled bottles and fake foreign labels (Holmberg ).…”

The case of wine: understanding Chinese gift-giving behavior

“…Chinese consumers may choose more reliable and familiar local brands for gift-giving occasions given the absence of essential wine selection knowledge and need to minimize risks of social approval. Highly reputable local brands symbolize self-prestige and generate good face, which are prominent considerations in gift selection in China (Muhammad et al 2014).…”

“…Grape wine is often confused with other types of fruit wine in China (Veseth 2011) and is associated with its relatively short history of consumption and production. Historically, foreign wines, imported in casks, have been mixed with other fruit wines to increase their sweetness and reduce retailer costs (Muhammad et al 2014). This contributes to the different expectations and sensory preferences of Chinese wine consumers, where sweet wines with lower intensity level are generally preferred (Williamson et al 2012).…”

“…These benefits and positive product perceptions drive grape wine's popularity in China, especially for important social and cultural occasions such as business banquets and gift giving (Goodman 2009). Though grape wine is becoming popular for gift giving and social banquets, low awareness and limited knowledge remain the biggest challenges for foreign wine brands (Muhammad et al 2014). Particularly for red wine which is associated with luck and fortune in Chinese culture, many consumers still mistakenly believe that all grape wines are red (Liu and Murphy 2007).…”