Chinese producers see red over cheap European wine

Wines made by a Chinese wine producer are displayed during Vinexpo Asia-Pacific in Hong Kong May 29, 2012.

BEIJING (Reuters) - Chinese wine producers have asked the government to investigate whether winemakers in the European Union are dumping cheap wine in China.

The China Alcoholic Drinks Association has asked the Ministry of Commerce to look into dumping as well as subsidies to European wine makers, the association said on its website.

Wine exports from the EU to China have increased sharply in recent years, reaching 169 million litres in 2011, compared with 35.9 million litres in 2008, Wang Zuming, secretary of the association's wine subcommittee, was quoted as saying.

"Almost all wine enterprises in China have strongly felt the impact of the attack by wine imports from the European Union, with operations, performance and market share seriously sliding," Wang said.

"The Chinese wine consumption market has shown great potential. By exporting such large amounts of cheap wine, it's obvious they're trying to seize Chinese market share."

Inexpensive wine imports to China are growing rapidly, says Jim Boyce, a Beijing-based wine writer who runs the blog Grapewallofchina.com. Wine from Spain made up some 5 percent of the Chinese bulk wine market in 2009, but that share has soared to 50 percent of the market now, he said.

"If you look at the first quarter of 2012, Spanish wines were 9.2 percent of the Chinese market by volume, but 5.1 percent of the market by value," Boyce said. "Whether that's dumping I don't know, but a lot of people are probably looking at that and thinking so."

Calls on Tuesday to the drinks association office went unanswered, and there was no response to a query faxed to the Commerce Ministry asking if it planned an investigation.

China has become the world's fifth-largest consumer of wine, according to an annual industry study published in February by VINEXPO/International Wine and Spirit Research.

Increasing wine imports are putting pressure on domestic producers. Dynasty Fine Wines Group Ltd (0828.HK) reported that 2011 revenue sank 10.5 percent from 2010. China Great Wall Wine Co saw revenue decline 2.1 percent last year, according to the Global Times newspaper.

Domestic brands frequently seek foreign investment and expertise, and foreign winemakers - mostly French - are investing in several new vineyards to produce high-end still and sparkling wine for wealthy customers in China.

Wealthy Chinese consumers show an overwhelming preference for expensive French wine, and Chinese companies and well-to-do individuals are buying multimillion-dollar wine chateaux in France's Bordeaux region.

(Reporting by Terril Yue Jones; Editing by Jeremy Laurence)