But rare wine isn't the order of the day. No, today I'm interested in exported wine. Specifically, wine exported to China. A recent article on GlobalPost.com (which is a publication I had never heard of until two weeks ago) addresses growing wine consumption in China:
Wine bars and boutiques are sprouting across Beijing, and trendy young consumers are flocking to wine-tastings at swish hotels. A dramatic 54 percent rise in wine consumption in China between 2011 and 2015 is predicted, a reflection of the increasing affluence of China’s middle classes, according to a new study by Vinexpo, Asia’s biggest wine exposition.Let's leave aside for the moment that this study was conducted by a "wine exposition" (whatever that is) and focus on the purported reasoning behind the growth. Specifically, that the increase in wine consumption is "a reflection of the increasing affluence of China's middle classes." The article also goes on to say that 40% of Chinese wine imports are from France, specifically. Plenty of countries make wine; that the increase in imported varietals seems to be focused on French wine implies not just that an increasingly affluent middle class wants to buy wine, rather, that they want to buy good wine.
Curious about how this trend might affect the American wine market, I pulled some numbers from the USDA Website via the FAS USTrade Query system. First, a look at total wine exports from the US, by country, over the last ten years (note, all volumes reported in Kiloliters):
|US Total Wine Exports by Country, 2002 - 2011 (click to enlarge)|
|Percent total wine exports to four countries (click to enlarge)|
|Total imports from Japan, China, and Hong Kong (click to enlarge)|
- Sparkling Wine
- Effervescent Wine
- Grape wine of an alcoholic strength not over 14% in containers holding 2L or less.
- Grape wine of an alcoholic strength not over 14% in containers holding more than 2L.
- Grape wine of an alcoholic strength of over 14% in containers holding 2L or less.
- Grape wine of an alcoholic strength of over 14% in containers holding more than 2L.
|Standard table wine exports to Asia (click to enlarge)|
- R_squared value comparing total global wine exports to standard table wine exports by country:
- Japan: .1567
- Hong Kong: .9754
- China: .9671
The article mentions that the majority of wine consumed in China is produced domestically. What the change in export number then means, really, is not that China is drinking more wine, per se, but that more people are drinking better wine. To that end, the article's thesis is entirely correct, but not just for French wine, for all high quality wine. Until Chinese vineyards begin rivaling the quality and consistency of the best vineyards in France, the United States, and elsewhere, as China's citizenry gains spending power in the global economy, look for this trend to continue.
If you were hoping to come away with an investment idea here, you may be out of luck; there is no grape futures contract in existence, but even if there were, it's unlikely investing in such an instrument would be worthwhile. Grapes aren't the key here, it's craftsmanship, tradition, and quality. To that end, investors in rare wine may actually see a boon from the growth of wine exports to China. If demand for quality keeps up, that rising tide should, in theory anyway, boost the values of all high quality bottles.
Normally I'd say something like "it's a good time to own a vineyard in Napa or Bordeaux", but really there's no need to state a priori truths.