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3.2. Results: The impact of China’s economic developme nt

3.2.4. Wine

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have been searching for the right opportunities to establish Lavazza in China and Asia, and this partnership is an important first step”. 117

Table 7 illustrates the value of Italian exports of coffee to China: the trend shows a gradual increase from 2012 to 2020, with a negative percentage change only in 2016 and in 2018.

Despite the reduction of Chinese total imports of coffee in 2019 (-7.9% for tons and -3.2%

in value, Bperestero) Italian exports have registered an increase, with 19.811 thousand € and a percentage variation of 19% compared to the previous year. This might be the result of the aforementioned tariffs on U.S. coffee, which might have favored Italian coffee exports to the country.

Table 7 Value of coffee exports to China 2012-2020 (thousand euro and percentage change) Year Value (thousand Euro) Percentage change (%)

2012 6.617 22.5

2013 7.261 8.86

2014 9.398 22.7

2015 16.112 41.6

2016 15.873 -1.5

2017 18.971 16,3

2018 16.046 -15.4

2019 19.811 19

2020 20.898 5.2

Source: Elaboration based on Trade map data

As for other products, the growing middle class is influencing the Chinese coffee market, which is expected to grow even faster in the following years. In fact, forecasts show that the value of Chinese coffee imports might be 490.1 million Euros (Bperestero). With the increase of living standards, coffee demand will probably increase and foreign suppliers will be requested to export more. In this regard, Italian companies have to pay attention to their major competitors and to insist on promoting quality and Italian lifestyle.

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main competitors of wine. In this re gard, wine has always been perceived as a status symbol, consumed only by those who can afford it. Then, the adhesion of China to the WTO favored the reduction of wine import tariffs and foreign wines began to enter the Chinese market at a fast pace (Chen and Lombaerde, 2013; Liu et al., 2013; Li and Bardají, 2017).118

Therefore, the increase of wine imports from foreign countries, the rise of the middle-class and the consequent social transformation have also changed drinking habits. Wine was welcomed by many consumers and it is now appreciated also by women and young adults, living in urban areas.

Graphic 8 Worldwide wine consumption in 2020 (million hectoliters)

Source: Statista

Graphic 9 Wine consumption volume in China 2010-2020 (in million hectoliters)

Source: Statista

118 Castillo-Valero, S. Juan & Co., Wine consumption in China: profiling the 21st century Chinese wine consume, Ciência e Técnica Vitivinícola 34(2), p.72, January 2019

0 5 10 15 20 25 30 35

Wine consumption by country

0 5 10 15 20 25

2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Wine consumption volume in China

2009-2020

107

As illustrated by Graphic 8, in 2020 China occupied the 6th place for wine consumption, even before Spain and Australia which are among the top five wine producers of the world.

Graphic 9, instead, shows the evolution in the volume of consumptions from 2009 to 2020.

When choosing wine, Chinese consumers are influenced by some factors:

a. Health attributes related to wine: many of them believe that wine consumption is beneficial for the cardiovascular system and they prefer wine to domes tic liquor because it has lower alcohol content. As a matter of fact, the 80% of all wine consumed is red, even though lately white and sparkling wine are more appreciated.

b. Country of origin: the “made in” can be used as a competitive advantage by foreign brands. For what concerns wine, Chinese consumers are more likely to buy French, Italian or Australian ones because of their popularity and attributes.

c. Price: Chinese population prefers to spend more on better quality products.

Imported wine is still valued as a luxury product and it is a way of portraying social status, however it is possible now to find mid-range alternatives, which are appreciated by consumers.

Graphic 10 Wine imports of China 2010-2020 (thousand hl)

Source: Elaboration on Statista and OIV119data

Imported wines account for around 40 percent of the wine market in the country. In 2020, China was the fifth largest global wine importer, with 4.3 million hl and an import value of approximately 1.6 billion Euros120; imports by product type of wine highlight that 90% of

119OIV is an intergovernmental organization of recognized competence for its works concerning vines, wine, wine-based beverages, table grapes, raisins and other vine-based products.

120Ma, Yihang, Wine consumption volume in China from 2000 to 2020, Statista, 2021, available on: https://www.statista.com/statistics/425098/china-wine-consumption/n (last accessed

26/08/2021)

0 2000 4000 6000 8000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1000hl

Wine imports of China 2010-2020

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the total expenditure for foreign wines is represented by bottled wines, 6% by bulk wines and about 3% by sparkling wines (ISMEA).

In 2020, Italy occupied the 4th position with about 100 million Euros of exports, following Australia (625million €), France (447 million €), Chile (194 million €). Despite competition has risen a lot recently, according to a research conducted by EUSME Centre, market saturation is not yet considered a problem, as there is still significant potential in second- and third-tier cities, which are now expanding.

Table 8 Exports of Italian wines, divided by category

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020

Product Category

Value (thousand Euros) Table and

quality wines produced in

specified regions

63.862 57.586 55.172 67.624 78.421 100.697 100.791 103.765 74.822

Sparkling wine and other special wines

13.187 17.111 20.460 21.318 22.630 29.603 26.119 29.715 23.310

Cider and other fruit- based wines

105 302 817 979 2.188 1.811 1.333 1.856 980

Other non- distilled fermented beverages

55 232 427 665 223 521 1.513 1.758 782

Total 77.209 75.231 76.876 90.586 103.461 132.333 129.756 137.093 99.893

Source: Elaboration on ICE data

By looking at some data, we can observe that exports of wine have gradually increased, with a decline in 2020, due to Covid-19 pandemic. Exports in 2013 were affected by an anti-corruption campaign, launched by the Chinese authorities in 2012; the new measures formulated by the government have influenced sales of high-end wines and international spirits, with a percentage change of -2,6% of Italian wine exports in the previous year.

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Between 2014 and 2018, despite Chinese consumers’ overall demand of wine has increase by 78% in volume and has more than doubled in value, the growth of China's imports of Italian wine was more contained, i.e. equal to 42% in volume and 82% in value (ISMEA).

2019 has been an important year for the whole wine sector and it is estimated that between 2009 and 2019 there was an increase of exports of Made in Italy wine to China that has reached +548%. (Coldiretti)

Italy exports mainly concern red and rosé wines with PDO and PGI certifications, but there are also other categories which show good market potential. Bottled wines represent the largest share with 87% of the total value and sparkling wines 12.3%.121 Italian sparkling wine has shown a significant increase and, according to Daxue Consulting, this is due to a growing interest to this category especially by young female consumers who have more weight associated to sparkling wine (43%) than imported wine (30%), which prove a potential of growth for this market through this specific target segment.122 As a matter of fact, Coldiretti has estimated that in the first seven months of 2019 there was an increase of Prosecco exports of 31%, which has been driven by the collapse of US wine exports to China, caused by the tariff war between the two major powers of the world. As for red wine, the most popular Italian wines to the Chinese consumers are Amarone della Valpolicella, Barolo and Brunello di Montalcino, even though Barbaresco and Chianti are also present in the market.

Graphic 11 Quantity of Italian wine exports (tons)

Source: e laborations on ITC data, Trade Map

121Ibidem

122 Daxue Consulting, Understand the drinking culture in China, 2018, available on:

https://daxueconsulting.com/understand-drinking-culture-china/ (last accessed 25/08/2021) 0

10 20 30 40

2012 2013 2014 2015 2016 2017 2018 2019 2020

Quantity of Italian wine exports

to China

110

However, it must be pointed out that Chinese consumers still lack knowledge about wines, but this depends greatly on the city and on the consumer segment. The new interest in wine of Chinese consumers, especially of urban Millennials who are adopting Western habits, makes this sector particularly interesting for wine producers. Qualitatively speaking, Made in Italy wine can easily be compared to French wine but there is still a lot to do before it is perceived as an excellent alternative.

3.3. Results: Cooperation agreements and exports