Having faced ever-increasing competition from the New World for decades, the European wine sector will eventually have to battle with China in the international wine market, a new just-drinks report has warned.

However, for the time being, according to the report, rising domestic consumption means China's value as a market "offering huge export potential" outweighs the challenge the country's expanding wine industry may pose on the world wine stage.

Wine consumption in China has grown by 57% over the past ten years to 1.78bn hectolitres in 2012, 'The Post-Recessionary Face of the West European Wine Market' states. "At the same time imports have grown exponentially."

China only exports around 100,000 hectolitres of wine a year, but the country is now one of the top ten wine producers and consumers in the world. "The country presents little threat currently to the world wine trade but a time will come where production exceeds domestic needs thereby adding to the growing competition faced by Western Europe on the world stage."

The prospect of competition from China represents a further challenge to the European wine sector which has seen its share of the world wine market decline steadily. According to the report, in 1995 France, Italy and Spain combined accounted for 52% of the global wine supply. By 2005, that contribution had dropped to 50% and now stands at 44%. "European viticulture is facing intensifying competition through a mix of increasing trade liberalisation and the rise of the New World wine producers," the report states.

This article has been updated. Previously, the figure quoted for wine consumption in China over the past ten years was given as 17.8bn hectolitres, not 1.78bn hectolitres. We apologise for the confusion.