Prestige and History: How branding and bottling is critical to introducing your wine brand to China

As wine companies worldwide open their eyes to the true potential of China as a fantastic wine market, and in many cases a saviour of the wine industry (see my previous article “Ignore the Chinese wine market at your peril: How china can rescue the Australian Wine Industry” http://wp.me/pS6DN-1z ) it is important to consider the way wine is currently being marketed in China.  A vastly different drinking culture exists in China compared to the western world and as such, any penetration of wine into that drinking culture will require a considered market entry strategy that goes beyond the traditional wine marketing. Such a strategy would invariably require both an education of the Chinese consumer on how and why to drink wine and in addition to this an adaption of the marketing mix to appeal directly to the Chinese consumer. So what are Wine companies and distributors doing now in China to sell wine, and make it appealing to the Chinese Consumer?

Well it’s important to brand the wine appropriately. Most brands especially from Europe emphasise the word “Chateau” in their label, and many Chinese brands do likewise. This is understandable in a culture that is over 4000 years old, tradition and history adds prestige to a wine brand, and the word “Chateau” has an association with history and tradition. Some Chinese wine companies have gone so far as to build replica “Wine Chateaus” in China to capture the prestige and history of European wines and wineries. These Chinese brands also emphasise strong Chinese icons such as the Great Wall or the Silk Road, and this is wholly aimed at appealing to the nationalistic and patriotic feeling in China. However most of these Chinese brands are not really very great to drink…in fact I wouldn’t recommend them at all of I am honest. Of course that doesn’t mean they don’t sell in the Chinese Market, because they do!

Another brand image consideration in China is the bottle and closure device used. Even cheap, low cost wine is generally sold in bottles with a large dimple, and when you meet with wine distributors in China this is one of the first things for which they will look: How deep is the dimple? The bottle doesn’t need to necessarily contain prestigious wine, but it needs to appear that it does.  Using Cork closures is the other strong preference for the Chinese wine consumer, although a synthetic cork will probably suffice. The emotive sound and sensation of the cork being released is still important to the Chinese, and it is not as New Age as a screw cap. Once again this goes back to the desire for age, tradition, history and prestige.

 So what can we read into these branding and presentation preferences? Well wine is about prestige in China, and is more about the image than substance. If you think about my other article on understanding the Chinese wine market (http://wp.me/pS6DN-1G ), where I discuss the “shooting” and Toasting of wine in China, then taste is probably not going to be your primary motivation when buying wine in China. Ultimately creating the “right” image and branding for your wine will open up many more doors in China than the taste of your wine.

Present your wine brand as prestigious and you will find entry to the Chinese wine market much easier….but challenges will always exist, especially if you are from the New World Wine markets.

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What and how to drink? Educating the Chinese consumer about wine

In recent weeks I have discussed the Chinese Wine market and its potential for wine companies around the world. I have also discussed the challenges that are posed to wine companies entering the Chinese wine market for the first time (see my article on Understanding the Chinese Wine market: http://wp.me/pS6DN-1G ). The education of the Chinese wine consumer is critical to opening up the China to Wine, and ultimately creating a larger wine market. Wine education is therefore a long run project in China and so wine companies, distributors and even provincial governments are taking innovative approaches to this challenge. On a recent trip to China, I had the pleasure of being invited to a “wine tasting” that was put on by a local Chinese wine merchant, to show off his European and Australian wines. This wine tasting was in a purpose-built wine presentation room, with cellared wine in cabinets on all the walls of the room. At the tasting were all the powerbrokers of the local communist party and government, and they were seated in rank order along long rectangle tables facing the lectern at the front of the room. The guests were all introduced to the wines one by one, and a plate of food was served with each wine to show the matching qualities of food with wine. Throughout the tasting, each glass was sipped and savoured not shot.  This was all part of the education process, and seemed to be a great success. Unsurprisingly however, after the formal presentation of wines, everyone got up and did the networking thing, where toasts or “gan bei” was the order of the day….I guess some drinking habits die hard.

Another wine initiative is in Qingdao, Shandong province, which is a city on the coast of China about half way between Beijing and Shanghai. The initiative is interesting for it is a local government initiative designed at introducing the Chinese consumer to wine. Qingdao is a popular beachside resort, and in summer the city population can swell to nearly 20 million people.  It is also home to China’s most famous beer – Tsingtao, and was a former German concession in years gone by.  To help promote wine to the Chinese consumer, the Qingdao government have created “Wine Street”. Wine street is a one stop wine education and promotion centre, replete with Mine museum, wine distributors and restaurants showcasing wine.  The Qingdao Wine Museum has been built in a disused Mao era nuclear fallout shelter built underground, and takes advantage of some of the nearly 2000square meters of floors space in the tunnels to show people the history of wine.  It is like Disneyland for Wine, and showcases different wine regions from around the world, not just Europe. What a great promotional idea!

Across the road from the entrance to the Qingdao Wine Museum are 17 wine distributors shop fronts, all designed around a “traditional” European storefront facade, and inside the distributors showcase their wine with displays, tasting rooms and other paraphernalia. These wine distributors showcase many wines from around the world, and if nothing else, will help to build awareness of wine regions beyond old world wines in France and Italy. Next to the Wine museum is a series of restaurants which only stock wine from the various wine distributors. This is solely aimed at helping to cross promote the distributors, but as an added bonus it also helps to educate the consumer about wine as an appropriate accompaniment to food.

These wine education measures that are taking place across China are great news for International wine companies looking to introduce their wine brands to the Chinese domestic market. All that is required is that a market entry, promotional and distribution strategy can be tailored to the specific needs of the Chinese consumer so that ultimately there is a success. If you build wine awareness – They will come.

Getting your wine to the Party: Understanding the Chinese wine market

The wine industry in China is only really in its infancy, and as I wrote in an article earlier this week ” Ignore the chinese wine market at your peril: How china can save the Australian wine industry” ( http://wp.me/pS6DN-1z ), the chinese market is a potential saviour for wine industries in countries such as Australia. This is however no simple exercise, and there are many challenges. Then primary challenge is that there is not the same wine drinking culture in China as there is in wine markets such as Europe, North  and South America and Australia. The drinking culture in China is more about consuming your drink in toasts, or “ganbei’s”  see my previous article on Chinese drinking protocols “Gan bei: Business and ritualistic drinking in China”  (http://wp.me/pS6DN-12 ).  This is very different from the comparatively considered method of wine drinking that exists in these other wine markets. Most wine consumers in Europe, North America and Australia wouldn’t dream of “shooting” glasses of wine. This poses a challenge for wine companies wanting to export their wines into the emerging Chinese wine market.  It does not pose a significant roadblock to success however, and just means that China will need to be looked at in a different light to the traditional wine markets around the world.

There are a number of reasons for the emergence of China as a potential wine market for wineries around the world, obviously the size of the population is important, but it is the growth in the middle class that is the most appealing to wine companies and distributors.  The thinking generally goes that as more people enter the middle class, the more people exist who can afford to drink wine. As I mentioned earlier however, this is not part and parcel of the drinking culture in China, and so the consumer needs to be activated to consider wine as a viable alternative to beer, whisky, cognac or traditional Chinese spirits at the dinner/banquet table. And this is where the Chinese government becomes important. Wine is lower in alcohol concentration than spirits, and so has advantages for public health if consumers turn to wine instead of the traditional spirits like Mao-tai.

Any trip to the hyper-market in China whether it Carrefour or Tesco will find you standing in a wine aisle full of French, Italian, South American , Australian and home-grown Chinese wine. The other thing you will notice is that the bottles of wine are generally covered in dust. Why would this be the case? Well this is the standard approach that global wine companies take when entering new markets – get them into the supermarkets.  Well the only people who are buying these wines off the shelf are expats working in China, or Chinese citizens who have lived abroad. Definitely not the mainstream, and probably a waste of money for the wine company who may be paying the supermarket chain for shelf space. So who drinks this wine in China? Well at the moment, somewhere around 70% of all wine sold in China is sold to Chinese Government and Chinese Communist Party buyers….wow! I bet you weren’t expecting that! It’s not that they are hoarding wine, but instead they are stocking up on drinks for the banquets that are necessarily held as part of doing business and government work in China. If you are hosting a banquet then you will need to provide the wine, and the government and the CCP host the most banquets and parties.

So what does this mean for wine companies looking to enter the Chinese market? It means that to get access to the current wine market, it is necessary to meet and greet with wine distributors in China with the connections and existing contracts with the government and party. It also means that to take advantage of the next generation of Chinese Wine drinkers, it will be important to help educate the Chinese how and why they should drink wine. Ultimately China is a unique market regardless of the industry, and for those in the wine industry looking to take advantage of the future opportunities as they emerge it will require a marketing and strategic approach that is unique and customised perfectly for China.

Ignore the Chinese wine market at your peril: How China can rescue the Australian wine industry

Is it half full? or just enough?

The Australian Wine industry has been around for just short of 200 years. The major wine growing regions in Australia are long established, and in the 1980’s and 1990’s the Australian Wine industry took the world by storm leading the “new world wines” against the “old world wines” into the European wine market. This market penetration was based primarily upon the ability to produce wine in a stable and scientific method that resulted in efficient and effective wine production that was standardised. When this was added to the low relative value of the Australian Dollar, it resulted in the Australian Wine industry taking a large stake in the low cost wine categories particularly in the UK.  In the past few years this production advantage for Australia has been eroded by a number of factors, firstly a substantial increase in the number of vineyards in Australia, and subsequent grape volume has meant that Vignerons are now getting less per ton of grapes than ever before, keeping the cost of wine low for the end consumer, but ensuring there is no real margin for the wine producer. Secondly, there has been a transfer of the wine making technology into other new world wine producers in New Zealand, South Africa, South America and North America, which has resulted in substantial competition at the low cost wine segment. The third and final factor has been the appreciation of the Australian Dollar in comparison to the currencies of these other New World Wines and the European markets themselves. This has ultimately ensured that although the wine glut has kept the cost of wine low from Australia, it has been rising in cost due to the currency conversion. And thus, the Australian share of the European wine market has fallen or stalled. The Australian wine industry is at a serious cross road; will it survive or ultimately fail?

What can Australian wine producers do to save their industry?

These are indeed challenging times for the Australian Wine industry, and it could well be that the root cause of the

Can wine enter the mainstream in China?

problem stems from targeting the low cost wine segment, and bulk wine, instead of a premium or super premium segment as well.  A rebranding of Australian wine as high quality is probably required going into the future if Europe is to remain or regain its status as a strong market for Australian Wine. The other potential for Australian Wine industry redemption is in the new and emerging wine markets in Asia. China holds a great deal of promise for Australian wine producers, and in contrast to the European Wine producers, China and other Asian markets are in Australia’s backyard, so there is geographic and logistic advantage for Australian wine producers which they can take advantage.

The wine is flowing in China

The wine is flowing in China

China is a market full of complexities and challenges to much of the western world, and it is true that the current market penetration of Wine into China is only minimal, with most Chinese preferring to drink Tea, Beer or traditional Chinese spirit wines such as Beiju or Maotai. However, wine does exist in China and there is a growing home grown wine industry in China, with vineyards and “chateaus” popping up in many regions of China. There is also a strong presence of French and Italian wines in the Chinese market, with their perceived prestige amongst the average Chinese wine consumer. The important thing here is that this wine market is only in its infancy, with only 5% wine penetration into the Chinese drinks market. In any other market, with perhaps the exception of India, a market of only 5% would seem very small and of little consequence to serious wine companies, but it should be remembered that we are talking about a country with a population of between 1.3-1.5 billion people.  There is also a drinking culture that exists in China, as I have already discussed in my previous articles “The Subtle art of the Chinese banquet”( http://wp.me/pS6DN-D)  and “Ganbei: Business and ritualistic drinking in China”  (http://wp.me/pS6DN-12 ), so Australian Wine companies do not need to create a new culture, just help to adapt it to drinking of wine.  

Ignoring this market potential may result in the Australian wine industry missing one of the greatest opportunities to emerge in recent years. So with the correct branding and industry support, the Australian wine brand can be positioned as the clean green and prestigious wine product at a comparable or enhanced standard to the traditional European wines.  It may not be the sole saviour of the Australian Wine industry, but it sure will go a long way towards to helping it survive. If I was advising Australian Wine companies on their international strategy, I would advise them to seriously consider the Chinese Wine market.

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