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The human toll and economic cost of Covid-19 has been staggering, including for the global wine trade. But it has also meant opportunity for some, with China's struggling producers among them.

Tougher entry for importers, home-court advantage for local producers and rising pride in domestic brands have created a sense this is China's moment to seize.

Even so, despite the local wine industry investing heavily in quality and marketing, consumers have been fickle, and production has declined by over half since 2015 while industry revenue stands at less than 3 percent of Baijiu, the country's national spirit.It has also created a sense of relief. Producers have made impressive quality gains this past decade and earned thousands of medals from the likes of Concours Mondial and Decanter and kudos from critics like Jancis Robinson and James Suckling. China also has a top-three wine education market, a growing niche of consumers exploring products like craft beer and spirits and an ecommerce sector with vast product choice.

So, what has Covid changed?

Tougher entry

For one thing, the market became tougher for imported wines. For some, the threat is existential, such as Chinese tariffs in March on Australian bottled wine that overlapped calls by Canberra for an inquiry into Covid's origins and that did not go over well in Beijing. Due to tariffs of 116 to 218 percent, Wine Australia reports that exports to mainland China plunged from $419 million in first-half 2020 to $13 million in first-half 2021.

That end to Australia's run as the top bottled wine source left a gaping hole, notably in the lucrative gift-giving and banqueting niches, where Penfolds had cashed in with high volumes at high prices. This niche, still to fully recover from Covid, is still being ogled by competitors like France and Chile and by local producers who think growing pride in local goods – see below – will help.

In other cases, the challenges for importers are incremental. Not only is the cost of shipping wine to China drifting ever upward but importers face departure and customs delays that translate to costs for everything from reefer containers plugged in for extra weeks to sales lost to wine arriving late for, say, holiday sales. (Shipping executive Florian Chaoloine of Ziegler joked on social media app WeChat that bottle labels should state a wine was aged 12 months in oak and six months in a shipping container.)

And delays can happen instantly given China's zero tolerance of Cqovid. A single case in August at Ningbo-Zhoushan port, the world's third-busiest, closed a terminal for two weeks, with offloading delays and ship diversions still having ripple effects. Business is thus unpredictable and tougher for importers and easier for local producers, who export little and can easily move products in a market where distributors already seek alternatives to Australian wine and where premium Chinese labels are increasingly found in bar, restaurant, hotel and retail portfolios.

Home-court advantage

China's near-quarantine status as a country also helps drive interest in local wine. Unable to go abroad, travel-thirsty consumers are discovering their homeland. And while Covid outbreaks can disrupt travel, the skies and rails have largely remained open, with the State Council predicting domestic trips in second-half 2021 to be 88 percent of 2019 levels.

Adventurous travelers with disposable income and a desire for unique life experiences are pursuing lesser-known destinations, including wineries. The proliferation of tour options ranges from traditional firms like Easy Tour offering hybrid itineraries of wineries and historical sites, to boutique players like WildChina/UnTour handling in-depth programs, to custom-made tours led by wine educators.

These multi-day tours, typically from $1500 per person, are creating much-needed positive and personal links between producers and consumers. And as Chinese wine carries a sense of discovery, a "did you know?" factor, these tourists can drive the word-of-mouth advertising that encourages others to give Chinese wine a try.

Rising nationalism

Parallel to this is steadily growing pride in domestic products, a trend stoked pre-Covid by factors like the US-China trade war, cultural faux pas by global brands and the simple fact China's manufacturers increasingly turn out high-value products, from Li-Ning sports shoes to Xiao Mi phones to the high-speed trains crisscrossing the country. As global management consultancy McKinsey reported in 2017: "Local brands are winning because they better address consumer needs in three areas: value for money, quality and aftersales service."

Such pride is especially strong in younger generations – consumers aged 40 or less – who have only known a China with growing economic power.

"China is undergoing a consumer brand revolution," reported the New York Times in April. "Its young generation is more nationalistic and actively looking for brands that can align with that confidently Chinese identity."

This hasn't been lost on the wine trade, either, with some making an appeal via a "Chinese people drink Chinese wine" slogan.

The Covid era has further fueled this pride. China's response to the virus crisis is seen as far superior to elsewhere, a success story that means harsh reactions to any criticism of the country and creates further interest in local history, culture and products.

Here's just one data point: a report on ecommerce giant jd.com's blog in May stated the sales volume and number of consumers 6 percent and 18 percent faster for domestic than international brands year-on-year, with growth seen across all city sizes.

Seizing the moment

China's wine industry is keen to leverage this blend of importer difficulties, home-court advantage and national pride. From top to bottom, much of that industry is in motion. Here are just three examples.

In June, central government authorities backed Ningxia's plans to double vineyard coverage and boost production to 300 million bottles per year by 2025, with stretch goals of tripling coverage and producing 600 million bottles by 2035, which would put it on par with Bordeaux.

And Ningxia, a region largely unknown for wine a decade ago, now has active sub-regional groups. This year, Yinchuan Wine Association had its own pavilions at trade fairs, hosted a distributor conference at home and organized a promotional tour across China, including 36 tutorials in 20 cities.

On the smallest scale, young people who lack vineyards and wineries but possess ambition are buying grapes, renting equipment and creating their own brands and followings. A decade ago, the industry seemed wedded to Cabernet-style blends by traditional-style producers. Now it would be no surprise if an independent winemaker popped up with a tasty Malbec, Saperavi or Tempranillo – and found a niche of consumers to try it.

Will all of this be enough for Chinese wine to finally make a big breakthrough? As noted, it's not enough for a brand to just be local, it must also offer quality and value. And perceived high prices have long plagued Chinese wine, with the trade trying to offset this by pointing to all those medals and kudos.

Crucially, wine consumption still averages under a bottle per year. For glass half-empty types, this can mean perhaps grape wine simply isn't a good fit for China. But for glass half-full folks, it simply means finding the right opportunity. And that due to all of the current advantages, that opportunity is now, thanks to a crisis that was almost as unexpected as the quick rise of quality Chinese wine itself.