What makes wine one of the best products bought in China?
What are the habits and characteristics of wine consumption in China? How would you describe the typical profile of the Chinese consumer? What are their preferences in terms of brand and category? The main features of the Chinese wine drinking behaviour will be developed here, as well as how wine brands manage to sell their bottles within this huge market.
What is the profile of the Chinese wine consumer?
The average Chinese consumer drinks about 1.15 L of wine per year per capita drinking age. However, provisional statistics indicate that the average demand for wine in China is expected to double in the next few years. According to a 2011 study by the British firm IWSR on the world market for wines and spirits, China will likely become the fifth largest consumer of still wines (non-sparkling) imported in 2014, gaining three places compared to 2010 and by four compared to 2009 with a total of USD 3.19 billion of imported wines.
In China, the main consumers of wine are people living in large urban centers, with an even greater concentration in the major cities of Guangzhou, Shanghai and Beijing in particular.Currently, the largest consumers are young people from wealthy families. Indeed, 50% of Chinese wine consumers are between 25 and 44 years and consider wine as a product of culture and luxury. This is why the Chinese government was able to launch promotional campaigns across the country, with particular emphasis on the factor “healthy” regular consumption of moderate wine however, to promote sales.
Officials, the wealthier classes of the population and young urban couples attracted to Western consumption patterns are preferred targets by exporting wine to China: they are – with Western expats based in China – the largest consumers in the local market.
What are their preferences in terms of brand and type of wine?
The Chinese have a strong preference for red wine at the expense of white wine, although the consumption of the latter is gradually increasing for some time. The fact that in China, the color red stands for happiness, love and luck is linked to this fact…
As for different tastes, the Chinese prefer fruity, softer, less irritating wines. For red wines, the most famous variety is Cabernet Sauvignon. For white wine, the Chardonnay is the best known. Other varieties such as Sauvignon Blanc or Riesling are also highly appreciated by Chinese consumers, and can be found easily in the area.
Knowing those simple facts ca help tremendously in selecting the type of wine to sell and targets to aim for. Although tastes are more likely to evolve and diversify, the current situation is not yet to be modified; at least not too fast.
The market is divided between large majorities of low-end wines (60% of total consumption), mid-range wines (30% of total consumption) which are experiencing strong growth, and premium wines (10% only the total consumption of wine) whose sales are relatively stable for several years. More and more Chinese are trying to create their own wineries, inspired by the French Grand Crus.
China: engine of the global wine market
The Vinexpo (International Salon of Wine and Spirits) has published in January 2014 an eleventh study of conjecture on the market for wines and spirits. This latter was on the market for wines and spirits in Asia Pacific and in the world over the horizon of 2017, and covers the evolution of production and international trade consumption of wines and spirits from 28 producer countries and from 111 consumer markets worldwide.
As a state of fact, 155 million nine-liter cases of red wine consumed in 2013. With more than 155 million cases nine liters of red wine ( or 1.865 billion bottles) consumed in 2013, an increase of 136% compared to 2008 , China , including Hong Kong, now stands ahead of France (150 million cases ), Italy (141) , United States (134 ) and Germany (112).
Nonetheless, China remains the fifth largest consumer of wine in general, including the so-called “quiet” wines and sparkling wines.
Assets necessary to sell
Studying the Market is enough to fully penetrate a country with one’s products. A good wine representative has to be committed to some qualities that will ensure a successful representation in China. For instance, it can be seen as mandatory to have a network and many contacts, a lot of energy and a strong liver, the administrative tasks must not overwhelm him and both the French and the Chinese entity must give him support. These qualities will allow a sales representative to identify the opportunities, to negotiate and to work closely with his customers:
A product adapted to the Market
Chinese consumers attach importance to the names and brands; it is easier to sell a famous and celebrated wine. Even though Chinese people are getting educated about wine and they are moving upmarket, it is important to keep in mind that the Chinese market is a price oriented market.
The packaging is very important as well, wine is a top of the range product in China, and the labels must show that the product is a top of the range and famous product. A label where it is written AOC for instance will be more attractive for a Chinese consumer.
A good network
Trust is essential to do business in China. If you are introduced or recommended, a trusting relation will be established more quickly. It is recommended to be surrounded by people who already have a good network in China.
The organization of wine tastings, in order to share your passion for wine and to show your products, is also necessary. A good sales representative must not hesitate to share his knowledge about wine with Chinese consumers. This is also the occasion to gather his Guanxi (network) and to forge links with potential importers or distributors.
Rent a desk in a co-working space seems to be a relevant solution when you launch your company in China. It will allow you to access to an existing network and use a space made for organizing wine tastings.
Wine market in China is very competitive. A good sales representative must be rigorous, perfectionist, hard-working and very persistent. This last qualities seems to be essential to establish you company and to be able to meet with wine importers and sellers.
The sales representative must not hesitate to be a part of many business lunches, where he will have to follow Chinese customs in order to gain Chinese businessmen’s trust.
He must also be a part of many fairs and events, dynamism and a pronounced taste for wine seem to be two necessary qualities for a good sales representative.
Using a PEO
A good wine sales representative is always rushed, going from business lunches to fairs or events. He can’t waste his time with the administrative procedures. In order to optimize his time, it is recommended to be surrounded with skilled people who will take in charge the administrative tasks.
To go through an umbrella company (or Professional Employer Organization, PEO) is a good solution. This one will take care of your accounting, tax declarations and the payment of your team. This is where INS Global Consulting intervenes: thanks to its services the entrepreneur’s project stays flexible and the sales representatives do not waste time with administrative tasks or with the creation of a structure. They can stay focus on the core business and sell wine in the most efficient way.