China's alcoholic drinks demand - a key market for B.C. - recovers post-COVID

China’s reopening post-COVID has led to a spike in consumer demand for alcoholic beverages like beer, a new report finds - a trend that may benefit wine exports from Canada.

According to a Euromonitor report on the price and availability of goods in the Asia-Pacific region this month, Chinese off-trade (sold through retailers and supermarkets instead of hotels and restaurants) demand for beer has risen between April 12 and May 3 - partially driven by its annual May Day holiday period and long-weekend. Wine, meanwhile, maintained a lower profile but “enjoyed a low out-of-stock level” guaranteeing steady supply as demand recovers, the report said.

Another trend in Chinese alcoholic drinks sales, the report found, was the advent of e-commerce sales (now accounting for 11% of the off-trade totals) - which grew the fastest among all off-trade sales channels. All these numbers, said Euromonitor’s China analyst Mark Miao in the report, bodes well for the industry in post-COVID recovery.

“Alcoholic drinks was one of the industries that was most severely impacted by COVID-19,” Miao said. “A large number of restaurants and bars were temporarily shut down during the Spring Festival, which greatly constrained sales of alcoholic drinks during Q1 2020.

“China has now almost fully come out of lockdown, and local governments are encouraging consumers to go out and spend money to boost the economic recovery,” Miao continued, noting government has sent out vouchers to encourage consumption during May Day.

Overall, global COVID conditions may still severely suppress the Chinese alcoholic drink market for 2020, and the cancellation of major sporting events like the Tokyo Olympic Games and the Euro 2020 soccer championship doesn’t help. But Miao is optimistic that the e-commerce numbers may offset some losses.

China remains an important export market for B.C. wine. According to the BC Wine Institute, 84% of the province’s $9.3-million in wine exports in 2015 went to China. And while trade advisors like industry veteran Allison Boulton have long called for diversification, it does not take away from the fact that China remains a key market for B.C. wine.

There’s also still potential for gains, Boullton said previously, in that China’s population is still growing - while wine remains a newer product that may intrigue new consumers. Then there’s the Chinese consumption power, she noted.

“Not many Canadian table wines sell for below $10 per bottle… Chinese consumers are willing to pay the average per bottle price of $30, a premium price point,” Boulton said. “Ours is a reputation of an up-and-coming, boutique producer of wines you’ve never tried before.”