Bordeaux taken over by the Chinese

by Konstantin Krook on November 13, 2012

We are living in a world of globalisation, where trade patterns and investments cross the globe in unpredictable and quickly changing ways. In an article in the Swedish business daily Dagens Industri it is reported that close to 40 vineyards in the premium wine district Bordeaux in France have been acquired by Chinese investors. At the moment one of the best vineyards, Chateau Bellefont-Belcier, maker of Saint Emillion Grand Cru, is being sold to a Chinese businessman for 20 million GBP.

To us, this is not surprising. Today, in 2012, USA remains the largest consumer but will be replaced in this position by China already by 2015. Also global consumption and demand patterns are tipping the scales, moving the centre of focus to Far East Asia.

The European Union has the leading position of the wine market globally, according to FAO 2006, it accounts for:

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– 49.9% of growing areas

– 39.1% of grape production

– 60.0% of wine production

– 55.4% of wine imports

– 72.8% of wine exports

However as a result of growing globalisation, the EU wine market has to face changing circumstances and increasingly sharp competition. In the last 10 years, European imports from non-EU countries have doubled. At the same time countries such as United States, Chile, Argentina, South Africa and Australia have developed aggressive marketing policies, while promoting products at highly competitive prices.

Important trends in the wine sector are the increasing consumer preference for organic products and changes in packaging. The traditional glass bottle is still dominating but other forms, such as the bag-in-box and PET bottles are in strong development. This development seems to be driven by the eco-credentials of the new packaging forms and also by convenience.

The demand side shows increasing numbers from the Asia-Pacific areas, which in turn drive the development in wine sales with 8-10% demand increase per year. It also shows that an increase in both importance of product brands and the purchasing power of the elite are driving for higher demand and higher prices in the premium class.

About Konstantin Krook :

Konstantin Krook is a consultant at Bearing, specialising in research and place branding. He is educated at Södertörn University and has experience from the Scandinavian, Russian and UK markets. In 2012, Konstantin wrote a thesis together with Victor C. Rodriguez titled “Comparative Analysis of Place Brands – A study on how places are communicating on the internet”.

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