China and the Law of Supply and Demand

Wine consumption is on the rise in China.

According to statistics compiled by International Wine and Spirit, the last six years have seen the number of liters consumed increase thusly:

2004 – 1.5 million

2005 – 1.6 million

2006 – 2 million

2007 – 2.4 million

2008 – 3.9 million

2009 – 6.3 million

While 6.3 million liters may pale in comparison to that of developed nations, the percentage increase is impressive – particularly during a global economic downturn.

So it should come as no surprise that a number of Chinese businessmen now have their eye on the Napa Valley, seeking ways to boost exports of the valley’s wines to their country.

In particular, the businessmen are looking at vineyard land that’s for sale, and at striking deals to ship bulk wine to China for blending, bottling and labeling there.

What does this mean to the American wine consumer?

Well, if exports to China were to increase dramatically, that would tighten the supply of wine available for the United States. And you know what happens when demand exceeds supply: retail prices go up.

We’re living in a very small world today, and as China continues to assert itself on the economic front, it will impact virtually all industries – including the wine business.

Posted in The Wine Business
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