Fine wines languish in warehouses

To be sure, China's wine industry has long-term potential: the market is already the world's fifth-largest, but with only 38 million wine drinkers-mostly in big cities such as Shanghai, Beijing and Tianjin－among a population of 1.4 billion, annual consumption per capita is only 5.8 liters, a fraction of the 50 liters consumed in France.

For now though, the inventory overhang and the downward pressure on prices is making it hard to turn a profit.

Even China's biggest wine importer, ASC Fine Wines, has trimmed prices and taken a hit to its margins, a person with direct knowledge of the firm's operations told Reuters.

ASC, owned by Japan's Suntory Beverage&Food Ltd, said the wine market was in a new slower stage of growth and that consumers were increasingly "price-conscious".

"We are expanding our entry-level wine selections to meet the changes in consumer demand," said ASC's Chief Executive Officer Bruno Baudry in e-mailed comments.

The squeeze on prices could be better news for more affordable New World wines, with countries such as Chile and South Africa already taking more market share with wines under 100 yuan.

"There is still demand for imported wine, but not the same wines," said Guillaume Deglise, CEO of Vinexpo, which organizes wine fairs to help introduce producers to China buyers.

"Before it was mostly the luxury end of the business－up-market wines from Bordeaux. Now it's the entry-level market."