Xi wants Chinese officials to drink less and it's hurting global wine trade

China's push to curb official drinking and weakening demand are leaving global wine producers with excess inventory, falling prices and shrinking export markets

China’s thirst for imported wines is drying up, and with it, one of the foundations of the world’s wine trade. The decline has been underway for several years, first as the pandemic caused disruptions, then as a decline in the property market capped consumers’ spending power, and now a May 2025 directive banning alcohol at government and Communist Party events has cut into a key source of demand. Collectively, they have depressed demand to a tiny fraction of what it once was, leaving unsold inventory and prompting producers from Australia to France to reduce output. What was once the most stable and expanding source of growth for the world’s wine trade is no longer acting like it, and the consequences are now being seen.

 

 

The impact of the May ruling has been significant, especially since official banquets and business meetings played a major role in the pattern of wine consumption in China. The impact has been almost instant, and officials are being cautious even about consuming wine at all, as even state-linked companies are not serving it at meetings, according to a report by the Wall Street Journal (WSJ).

 

How large is China’s wine market and how has it changed?

 

China was once an unlikely leader in global wine market demand. It had grown rapidly from the mid-2000s, raising its proportion of global wine imports to about 8 per cent in 2017. At its peak in 2018, China was importing almost $3 billion worth of foreign wine, WSJ said.

 

However, China’s wine imports are now about half of what they were in 2018, with volumes continuing to decline in recent years. The slide has defied earlier expectations of a gradual recovery after the pandemic.

 

How China’s slowdown is impacting global wine producers

 

Because China had become central to global demand, its slowdown is now rippling across wine-producing regions.

 

Treasury Wine Estates, one of the world’s largest wine companies, disclosed in December that it was sitting on about $150 million worth of unsold inventory in Chinese warehouses, WSJ reported. The company has since moved to cut shipments and reduce stock over the next two years. European drinks groups such as Pernod Ricard and Diageo are also seeing double-digit declines in China sales.

 

At the producer level, the stress is more visible. In Australia’s New South Wales, one exporter that once earned 40 per cent of its profits from China has not recorded a single sale there in the past year. With demand collapsing, it is leaving nearly a third of its grapes unharvested and cutting labour costs.

 

And in France, the impact is more structural. Bordeaux, which once counted China as its top export market, has seen shipments to the country fall sharply. Since 2023, the region has removed roughly 20 per cent of its vineyard area as growers respond to sustained oversupply.

 

Why China’s wine consumption patterns are shifting

 

While the crackdown on official drinking is a key trigger, it is not the only force at work. China’s wine boom was closely tied to business culture, where imported red wine became associated with status, gifting and official entertainment, WSJ said. That association is now working against it. Younger consumers increasingly do not see wine as part of everyday lifestyle consumption, limiting its broader appeal.

 

Economic factors are also reinforcing the shift. The property market downturn has eroded confidence, while slower income growth is curbing spending on premium imports. Earlier disruptions, including tariffs on Australian wine imposed in 2020 and removed only in 2024, also unsettled trade flows and inventory planning.

 

With China no longer acting as a reliable growth engine, exporters are being forced to diversify markets and rethink their pricing and positioning.