Corked? Fine wines languish in China warehouses as consumers cool
By Adam Jourdan
SHANGHAI (Reuters) - The crates of Chateau Brehat wine from Bordeaux had gathered dust for three years in a bonded warehouse on the outskirts of Shanghai before the owners cut their losses in July, slashing three-quarters off the $50 price (£32.3) tag.
The fire sale was prompted by a huge oversupply of wine that had built up after a swarm of importers jumped at seemingly stellar growth from 2010. China wine consumption - which had been rising in double digits - dropped last year and is set to inch up just over 1 percent annually until 2020.
The striking slowdown is a headache for a global wine industry pinning hopes on fast China growth, and a further sign that Chinese consumers are reining in spending even as Beijing hopes they will pick up the slack from falling exports.
"When we started there was huge demand so we could control prices, big margins no problem," said Xavier Grangier, sales director at logistics firm Europasia, which runs the 4,000 sq meter (43,000 sq ft) Shanghai warehouse storing 250,000 bottles of mostly European wine.
Now, his firm has had to lower some prices and been stuck with some wine it is unlikely to sell.
"In Shanghai alone, 2,000 firms in the wine business just vanished over the last couple of years," he added.
China's retail wine market is worth around 78 billion yuan (£8 billion), with imports making up around a third, according to a 2015 report from wine data analytics firm IWSR.