China 'huge but possible' for wine importers, conference hears
- Friday 25 May 2007
Speaking at a Decanter seminar entitled ‘How to be successful in China - presenting the facts, exploding the myths, and profiling the new consumer’ at the London International Wine and Spirits Fair yesterday, an expert panel said the current 2.3m-case market is expanding.
There is a possibility the growth could represent a ‘speculative spike’ similar to the bubble of 1997, but there are a number of factors driving the market that make it more solid than 10 years ago.
Seventy per cent of the market is on-trade, of which the vast bulk is four- and five-star restaurants and hotels. France is by far the leading exporter, with 750,000 cases. Australia sells 200,000, followed by Italy, Spain, the USA and Chile. Of those, only Spain, Chile and Australia are increasing their market share. The rest are either flat, or losing share.
The panel - Ian Ford and Brendan O’Toole of China's leading importers Summergate Fine Wines, and Simon Tam of the International Wine Centre in Shanghai - outlined the main drivers of the Chinese boom.
These include an emerging middle class, an ‘explosion’ in the number of fine dining restaurants in the main centres of Beijing, Shanghai, Guangzhou, Macau and Shenzhen, the influence of domestically-produced wines, and the increasing availability of imported brands.
At the same time, Ford said, it’s essential not to be seduced by the size of the population. ‘Importers think, “There are 1.3bn people – it’s a big market!”. But in reality 2.3m cases is a small market.’
Importers must ‘build slowly and persevere.’ Ford cited an importer which started with a target of 200,000 cases and now is stuck at 8,000. ‘Expansion ahead of the brand possibility can do irreperable damage to your brand,’ he said.
But the main message of the seminar was, cracking the Chinese market is not as difficult as popularly imagined. ‘It is a huge country, but possible,’ O’Toole said.
Various myths were exploded, including the age-old belief that the Chinese like to dilute first growth Bordeaux with 7-Up.
‘It has happened,’ Tam said. But, he added, that was in the early 1990s when the quality of imported bulk wines was so poor that ‘they had no choice but to mix them.’
The current market, Tam said, is 80% red wine and 20% white, rose and sparkling. It is seasonal, with reds more popular in winter and whites in summer.
Decanter’s publishing director Sarah Kemp, who introduced the seminar, said, ‘We are very excited about the imminent launch of Decanter into mainland China, and are looking forward to the challenges of publishing in such a new and dynamic environment.’
Decanter is already published in Hong Kong and Taiwan but will be launched in mainland in a new, simple text version, later this year.