Hello, this is Natalie from Vino Joy News.

As we bid goodbye to 2023, let’s look at what’s to come in 2024.

Coming out of three years of ruthless ‘Covid Zero’, the thought was China's wine consumption would rebound strongly, but it never did. Wine imports further weakened and consumption again contracted. In fact, data suggests that China’s wine market size has now more than halved compared with 2018.

But what does 2024 have in store for us? Here are the few things I have my eyes on as the issues likely to set the agenda for 2024.

Australia’s return 

After three years of trade freeze, Australian wine is expected to make a return to China in 2024. There’s no guarantee on the exact timeline. Australian side is confident that the tariffs will be lifted “early in the new year”, according to its trade minister Don Farrell. Chinese authorities in an earlier statement said the review process to lift the tariffs would end by November 2024.

Regardless, while closely monitoring news on the tariff removal, one question that trade from both sides are certainly wondering is if Australian wines can soar back to its former glory? Prior to the punitive tariffs, Australia was exporting about AU$1.2 billion worth of wines to China annually. The value is now plunged to just AU$8 million. With domestic Chinese market still confronted with weakened consumer spending and retail sales, it is unlikely imports will rebound to previous level immediately, or even close in the short term.

Australian wineries that had invested heavily in China are stung by the tariffs and may approach future market re-entry with heightened caution. This explains why Wine Australia cautions in its China update that “Regardless of the outcome, we remain committed to diversifying our market presence and cultivating opportunities in markets across the world. “

China-France 60th anniversary 

The year 2024 will mark the 60th anniversary of Sino-France relations. With Macron’s visit to China in April 2023, the two countries have pledged to take their relations to the next level, which would include deepening collaborations on viticulture and geographical indications (GIs) protections, in particular for the registration of GIs for Burgundy wines.

France currently ranks as China’s biggest wine exporter in terms of value. Bordeaux, the most exported French wine to the Chinese wine market, has seen its export value almost halved in the 12 months ended in July this year, accordign to UGCB president. There’s no guarantee if 2024 will see a comeback of Bordeaux in China, and the biggest wild card is still China’s economy.

The importance of the economy this year will be a priority for the country, without a doubt. President Xi Jinping noted in his New Year speech 2024—which marks the 75th anniversary of the Communist victory—China must “further boost confidence in development, and enhance economic vitality.”

The long overdue rebound?

When I talk to importers and merchants about the subdued 2023, most would tell me the downturn in large part is due to the fact that they are still trying to deplete stocks.

The expectation as they build is after a period of depletion, imports will start to pick up in 2024. But of course that itself hinges heavily on overall consumption mood. The property market meltdown has a huge impact on household spending, as 70% of family assets in China are tied up in property. This means most families are socking away savings and cutting back on non-essential spendings, and wine of course, considered a luxury and lifestyle product took a hit.

Latest import data of the first 11 months of 2023 are in line with the downward trend. Import volume during the period contracted 26.4% to 228.2 million liters, while value dropped by 17.8% to US$1.068 billion over the same period last year.

Industry official from China’s powerful drinks trade body China Association for Imports and Exports of Wine and Spirits (CAWS) estimated that recovery won’t materialize at least in the second half of the year.

Vinexpo Hong Kong

The highly anticipated trade show, Vinexpo Hong Kong, is set to make a comeback in May 2024 after shifting away from the market during the pandemic. This raises the question: will the event draw the eagerly awaited Chinese buyers?

Owing to the pandemic, Vinexpo's iterations in Shanghai and Shenzhen did not materialize, making the May fair, scheduled from the 28th to the 30th, the sole Vinexposium event to take place in China.

The last edition in 2018 saw significant turnout, with 1,465 exhibitors and 17,500 buyers, where Mainland China attendees represented the largest group, surpassing those from Hong Kong, Taiwan, Korea, and Australia. In other words, the turnout of Chinese buyers will determine the success of the show.

With China abandoning its Zero-COVID policy, it has successfully hosted its largest trade shows, CFDF (Chengdu) and ProWine Shanghai. Both events witnessed a substantial increase in attendance, with ProWine Shanghai hitting a record number of trade visitors. However, despite the surge, many merchants remained cautious, opting for a wait-and-see approach.

The three-day fair at the end of May could prove timely. Merchants and importers, having spent over two years selling through old stocks, may be in a position to restock. If Australia's hopes are realized and China has lifted its punitive tariffs by then, this could align perfectly for all involved. There's much to anticipate at the upcoming Vinexpo Hong Kong.

Of course, there are other issues and developments I am closely monitoring. The dynamics of the country’s top wine importers for one is something we are following closely, particularly with Wajiu. We are releasing a report of the country’s top 50 wine importers and distributors soon this month for subscribers, so keep an eye out for that.

What other top events and issues are on your mind? How optimistic are you about China’s wine market recovery this year? Let us know in comments.