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China: we must understand differences or lose out
February 18, 2010
Adam Lechmere
The opportunity China represents can only be exploited if brand owners truly understand they must cater for a radically different market.
The China Wine Market Landscape Report, a new study from Wine Intelligence, sets out the opportunities in a country that has an estimated 34m 'upper-middle class consumers' – a figure that should rise to 82m by 2025.
But exporters will only make headway if they have specific strategies for China and don't simply see it as another market.
'Global brand owners must find out what the Chinese really want, explain their products, and understand they must be tailored to Chinese needs,' Richard Halstead, chief operating officer of Wine Intelligence told decanter.com.
Consumers still find the process of buying imported wine difficult because even in international supermarkets like Carrefour or Tesco there is little information on the label to tell them what the wine is.
'I think most of the wine industry round the world would agree that Asia in general, and China in particular, represent a colossal opportunity for sales growth over the next 20-30 years,' Halstead said.
'Yet the closer you get to the market, the more you see that global brand owners have a lot of work still to do, both in terms of distribution and product positioning, to really engage with Chinese consumers.'
China is already the eighth largest wine market by volume. The report quotes recent data putting it at 72m cases, and growing at 18.5% per annum.
Wine Intelligence considers upper-middle class consumers – those with over RMB50,000 (US$7,300) disposable income per annum – as 'the key to imported wine's future in China'.
While 90% of the wine drunk in China is domestically produced, this growing rump of affluent consumers increasingly chooses imported wine.
Halstead said he wanted to explode 'the 7UP myth' – referring to the belief that the Chinese mix fine Bordeaux with soft drinks to make it more palatable.
'There is no doubt that there is a new generation of urban professionals in their 20s and 30s who like drinking wine.'
At the moment, 'Chinese culture has grown used to thinking wine equals red wine,' Halstead said, but this is changing.
While white and sparkling wine together represent only about 10% of imported wine consumption, 'there are growth opportunities for white wine as more people follow their own learning curves.'
It is becoming more usual, for example, for women to choose white wine with fish.
The China Wine Market Landscape Report came out of a research project conducted in partnership with InterRhone, the trade body for Rhone wines, which has 'identified China as the key growth area for their growers' products over the next 20 years', Halstead said.
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 As a wine retailer in Hong Kong, your report on China Wine market is very timely.
However, the biggest obstacle that I see is this: wine continues to be seen as a luxury product by the majority Chinese. It also doesn't help that many wine importers and retailers are so focused on bringing only the Grand Crus, thereby perpetrating this issue of luxury branding. Most ironic is that many high end consumers buy the big names just for the sake of showing off their trophies - they care not about whether they truly understand the complex flavours of the wine. In fact, stories about coke or ginger ale being added to Chateau Lafite are quite common.
Many new wine shops are also designed for this type of high end market, and the mainstream wine consumers feel intimidated and overwhelmed by the selections and price. Such consumer reaction is bound to discourage many from discovering the pleasures of wine. As to be expected when wine is marketed this way, consumers only buy wine on special occasions instead of using wine as a regular beverage.
For our part in this market, we have designed the wine shop to be user-friendly, informative and open-concept where customers can touch the merchandise freely and feel comfortable to ask questions. While we do not carry the major brands, customers are able to discover other exciting fine selections from other regions, not just Bordeaux. We are now attracting the mainstream buyers who just want to get started on good quality wines. Our goal is to make wine as a regular part of the new consumer lifestyle. Sadly, I do get customers who come looking only for the famous brands - this, too, will change when they begin to discover great value wines.
I have always believed that there are several levels in wine appreciation. To simply focus on the high end market is to ignore the huge potential among the new wine consumers who are not yet ready for the Grand Crus, and simply want to begin appreciating wine. Leo Baduria, Wines to Go Ltd, Hong Kong
I am quite surprised to see how Decanter journalists "play" with figures and not a single editor cares to check them. Starting with the Red Bicyclette scandal. And all that frenzy about China, where does it come from? According to OIV figures from the 7th General Assembly in Zagreb (June 2009) Russia is the 4th largest wine import market in the world with 5.7m hl (abt 66.7m cases) - forecast for 2008. According to official Russian Customs' report the total wine imports in Russia accounted for 47.8m cases in 2009. How come Chine could be 7th with 72m cases? This is even more than the US imports (3rd importer)! According to figures given at the RVF presentation during Vinexpo 2009 in Bordeaux by Jeannie Cho Lee MW the three leading Asian markets in terms of imports look like that: (Nr 1) Japan = 3 x China (Nr 2) = 4 x South Corea (Nr 3). The later imported around 4m cases in 2008. This leaves China with 5.3m cases for 2008. And Castel roughly delivers 23% of this (according to another article). Someone is delivering huge lies. It seems like China is becoming Decanter's own "Red Bicylette". Bisso Atanassov
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