Wine in China – a conversion is needed. Part I

Image: zhongguo-wine.com

“A big mistake is to constantly target wine lovers. We should convert the non-wine drinker”. This quote from Judy Chan, President of Grace Vineyard in the Shanxi province of northern China, was met with much agreement and a question from the floor. In a thick Australian accent came the question everyone wanted to ask – “but how do we do that?”

This exchange took place during the annual Wine Industry Conference at the Hong Kong International Wine and Spirits Fair, November 2015. The topic was Future and Sustainability: Wine and Our Times. Preceding the Fair was the well-established platform for gaining insight to the market in China, the annual Wine in China Conference. This is run by Meiburg Wine Media, a company led by Debra Meiburg MW.

During both conferences consistent themes emerged to address the question of how to convert the non-wine drinker. China’s market is changing and navigating the political and social landscape of this vast country is central to commercial success in the market. As Gregory Bielot of East Meets West Fine Wines puts it, “once you have found the right partner you need to support the distributor. Try to come regularly to China and invest highly in terms of education, events and marketing. Take the long-term view.”

In speaking with Dr Justin Cohen, International Wine Marketing Specialist at the Ehrenberg-Bass Institute, it becomes clear that education is key. The successful brand will be educated on the nuances of the Chinese culture. He says that “the key thing is to think about it from a Chinese perspective. What are the occasions they might come into the category for and where might they be interested in buying a wine?”

Helene Ponty, owner of Vignobles Ponty based in Beijing echoed this sentiment when she spoke of the importance of understanding Chinese culture; “toasting is very important so people need a wine that is easy to drink and can be easily drunk at once as required when toasting. It is irrelevant ‘how’ it should be drunk, the cultural situation is more important”. This was during a seminar at the Wine in China Conference focussing on the particulars of the Beijing market.

Additionally Mr Bielot speaks of education in the context of doing business in China. “Language is very important to be able to do business but also to understand the Chinese and understand their culture. You speak with many foreigners who don’t understand these differences and their impression is very negative. This is because they don’t understand the language and cultural sensitivities. The way of doing business is very different”.

Understanding how to conduct your business relationships is perhaps nowhere more important than when managing logistics. In a market where regulations are very dynamic, to say the least, the importance of relationships and contacts on the ground is key to successful management of wine transportation, according to Angela Zhou, Branch Manager of the JF Hillebrand Group.

The journey from changes in regulations to actual implementation is often very flexible, something that is important for Australian producers to keep in mind as the China-Australia Free Trade Agreement (ChAFTA) comes into place for 2019. The journey from media announcement to implementation will be challenging as those on the ground move to understand these changes and in converting non-wine drinkers to drinking wine, quality and consistency of product play a key role.

How should one manage this? Ms Zhou stresses the importance of finding the right distribution partner. It must be a partner with language skills and relationships already in place. The good news is that although China is vast in size, the majority of wine entering the country does so through the port cities, which should help minimise the number of locations coming to grips with the changes.

The AQSIQ also provides some information for exporting wine but it is the clearance brokers who usually provide the first insight into the implementation of new regulations. Because they must complete all the paperwork for the cargo the brokers experience first hand any changes in regulation implementation, which are often communicated via a piece of paper pinned to a notice board. This is yet another example of where strong relationships with those on the ground, whether it be directly or via your logistics company, remain all important.

After the wine has made it through the logistics process the next challenge is to successfully market the product. In the next instalment I’ll look at the challenges facing importers after their wine has landed, including the impact of the austerity measures on the market, food and wine pairing and consumer behaviour in the top tier cities. The austerity measures have, as Judy Chan of Grace Vineyard puts it, “revealed the real consumer – those interested in the brand because they are drinking it compared with those who were buying gifts in the past”.

Happy Drinking!