Major Wine Brands Are Pulling Back From China Due To Market Slowdown

After a decade of promises that China would become the next great wine market, the dream has quietly died. The turning point came in October 2025 when Treasury Wine Estates, the company behind Penfolds, did something almost unthinkable: they withdrew their medium-term growth forecast and paused a A$200 million share buyback.

Reuters reported the reason was the weak Penfolds demand in China, even after tariffs were lifted.

What makes this particularly striking is that Penfolds represented the best-case scenario for success in China. If the premium Australian brand that Chinese consumers actually recognized and desired couldn’t maintain momentum, what hope did smaller producers have?

The answer, increasingly, is none at all, as the OIV’s data on consumption reports that wine drinking in China fell 19.3% in 2024 to just 5.5 million hectoliters, continuing a slide that started back in 2018 when everyone was still bullish about the market’s potential.

China’s Wine Market Faces Its Sharpest Slowdown in a Decade

The import numbers reveal a market in freefall rather than temporary correction. Through the first seven months of 2025, China imported roughly 154 million liters of wine, down a staggering 33% from the same period the previous year, as BestWineImporters tracks.

Importers are stuck holding expensive inventory that isn’t moving, making them increasingly reluctant to bring in new stock even as producers desperately try to maintain their China presence.

What’s particularly sobering is how little wine Chinese consumers actually drink. The country’s per-capita consumption sits at roughly half a liter per year, making it the lowest among the top 20 wine-drinking nations, as OIV estimates.

This is less than one bottle per person annually in a country that was supposed to become a wine powerhouse as wealth increased. The trajectory has gone the wrong direction entirely, with consumption falling rather than rising alongside incomes.

The category breakdown makes clear this isn’t about all alcohol struggling in China, as IWSR’s data shows wine specifically declining about 7% year-over-year, with still wine down 9% while sparkling managed a 10% gain but from such a tiny base it barely registers.

Meanwhile, baijiu producers like Moutai are thriving, with Reuters and Jing Daily reporting expectations of 15% revenue growth to reach RMB 173.8 billion in 2024. Chinese consumers are spending heavily on alcohol, just not on wine.

Looking at the longer arc reveals how dramatically the story has changed. Back in 2017, China accounted for roughly 8% of global wine import value at the peak of optimism about the market. By 2023, that figure had cratered to under 3%, with total imports more than halving, as University of Adelaide economist Kym Anderson documents.

Producers who built distribution networks, hired local teams, and invested millions in marketing watched their market share evaporate in less than six years.

Major Producers Are Cutting Exposure to China

Treasury Wine Estates’ retreat sent shockwaves because Penfolds had been positioned as the one brand that truly resonated with Chinese consumers. The company had cultivated relationships, understood the gifting culture, and built brand equity over decades.

If even they’re pulling back, it signals something fundamental has broken in the value equation. The decision to withdraw guidance and pause buybacks isn’t something public companies do lightly, but an acknowledgment that the path forward has become too uncertain to commit capital or make promises to shareholders.

The retreat extends well beyond wine into luxury spirits. Moët Hennessy flagged major weakness in China, with The Spirits Business reporting spirits sales tumbling 15% in the first half of 2025 as divisions undergo painful cost-cutting. When LVMH’s prestige drinks unit struggles this badly, it indicates the problem isn’t wine-specific but reflects broader challenges in luxury alcohol across the board, though wine appears to be suffering most acutely.

The distribution market tells its own painful story, as Torres China got absorbed into Summergate under the Wajiu Group umbrella in the kind of consolidation that screams distress rather than growth. Western distributors who set up shop betting on China’s wine future are now combining operations to cut costs and survive, not positioning for expansion.

Meanwhile, IWSR identifies India and Southeast Asia as the next bright spots, characterizing China as “particularly gloomy,” as The Drinks Business reports. Marketing budgets are quietly being shifted, salespeople reassigned, and inventory redirected toward markets where middle-class expansion is actually driving wine adoption rather than markets where every projection has proven optimistic by orders of magnitude.

The Numbers Behind China’s Declining Wine Demand

The recent data destroys any remaining hope that removing tariffs would restore momentum. After Australian tariffs were lifted in 2024, there was brief optimism that pent-up demand would return. Instead, the first seven months of 2025 saw volumes crater 33% year-over-year, as Vinetur and related sources track.

The market briefly paused its decline when one obstacle was removed, then resumed falling, proving that tariffs were a convenient excuse for weakness driven by much deeper problems.

Per-capita consumption at roughly half a liter annually, as OIV estimates, represents the kind of number that makes sustained wine market economics impossible. Local press confirms approximately 0.6 liters for recent years, as Vino Joy News notes, validating that this isn’t measurement error but reflects genuine consumption that’s fallen to levels China last saw over a decade ago.

You simply cannot support the import infrastructure, distribution networks, and marketing expenses required for a functioning wine market on consumption this low.

Why Global Brands Are Losing Their Hold on China

The fundamental miscalculation was assuming Chinese consumers would adopt Western drinking patterns as they got wealthier. Instead, rising prosperity has allowed them to premiumize within categories they already preferred.

IWSR identifies the structural forces working against wine to be moderation trends, changing occasions, competition from cocktails and whisky, premiumization in other categories, all of which are playing out exactly as described in China.

Young professionals who could afford imported wine are choosing Japanese whisky and craft cocktails instead, products that fit better with how Chinese people actually socialize and drink.

The collapse of aspirational gifting removed what had been wine’s strongest use case even when regular consumption remained minimal. Anti-extravagance campaigns and economic slowdown have dulled the status signaling that once made expensive imported wine a prestigious gift, as Reuters notes in explaining Treasury Wine Estates’ struggles.

Banquets and corporate gifting had driven substantial volume even if Chinese consumers weren’t drinking wine at home, so losing this channel meant losing both the consumption wine never achieved and the special occasion demand it actually had.

Moreover, the distribution economics have deteriorated to the point where even committed players are pulling back. Distributors losing confidence in their ability to sell wine profitably naturally reduce inventory and cut marketing, creating vicious cycles where reduced availability and visibility further undermine whatever consumer interest remains.

Meanwhile, baijiu continues its reign completely unchallenged. Moutai’s 15% revenue growth guidance demonstrates that Chinese consumers happily spend enormous sums on alcohol, just not on wine. This isn’t about economic constraints or luxury fatigue but specific preference for spirits that align with Chinese traditions and social customs in ways wine simply doesn’t and likely never will.

For producers and investors trying to understand what went wrong, the China experience offers painful lessons about the gap between aspirational projections and cultural reality. The assumption that wealth would naturally drive Western consumption patterns ignored how deeply rooted preferences actually are.

The belief that premium positioning and brand building could overcome these preferences underestimated the challenge and the hope that younger generations would embrace wine as they modernized failed to account for those same young consumers choosing cocktails and whisky instead, finding ways to signal sophistication without abandoning drinks that actually fit how they socialize.