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Published 24 September 2012 05:48, Updated 25 September 2012 06:47
Increasingly, younger Chinese wine drinkers rely on recommendation, wine style and price to make decisions.
If you thought Penfolds was pushing it last year when it launched its $1000-a-bottle Special Bin 620 in Shanghai, stop reading now.
Last week the company announced it had sold one of only 12 “Ampoules” of Block 42 Kalimna cabernet shiraz 2004 to Hong Kong restaurateur Wong Wing Chee for an astronomical $168,000. He bought Ampoule No. 6. This is a master class in ego-stroking, not to mention luxury brand creation. Buyers of these items, unveiled at a private dinner in Moscow in June, will have a Penfolds winemaker travel to join them, wherever they are in the world, when they decide to open the bottle.
The company may have been emboldened by the success of the sale of the Coonawarra cabernet shiraz 2008. That special bin, of which there were less than 1000 cases, was sold out within months, says Treasury Wine Estate’s Asia managing director Anthony Davie.
“We haven’t maxed out where we could price products like this,” he says. “We were wondering about the 1000 Aussie dollar price point per bottle and what this showed was that Penfolds at this level can rub shoulders with the best French wines. That’s encouraging.”
Encouraging indeed, for any Australian winemaker aspiring to get into an Asian market that accounts for just 4 per cent of TWE’s volume but which contributes about 20 per cent of group profit.
So here are some tips for those who want to engage the Asian market:
1. CHANGE YOUR EXPECTATIONS ABOUT PAIRING FOOD AND WINE.
With a Chinese banquet that may bring all manner of dishes out in any order, what works with Western-style food won’t.
“In the early days, producers of imported wine were big on food and wine pairing,” Davie says. “You have to be a bit more relaxed. If Chinese consumers are happy drinking red wine throughout the meal, that’s fine.”
2. DON’T PLAY THE VOLUME GAME.
Most of the wine drunk in China is Chinese already. Brands like Great Wall Wine, Changyu and Dynasty Wine are local giants in an industry that accounts for about 90 to 100 million-odd cases of wine drunk in China – about 90 per cent of the total by volume, Davie says. Last year Penfolds sold just 1.2 million cases in its eight-country Asian region. Go for value.
3. LEARN THE MARKET NICHES.
“It’s been estimated that 80 per cent of wines are bought as gifts,” says Nick Miller of Beijing-based consultancy China Wine Solutions. “Many of these wines will never be drunk but will be passed on to others as gifts or put in display cabinets. Wineries need to know which market segment they are aiming for before they enter the market.”
4. ANTICIPATE THE CHANGING MARKET.
“Prestige-seeking traditionalists” – the people who buy expensive wines as part of a business obligation – make up 22 per cent of the wine-drinking population and 40 per cent of the market by spending, research company Wine Intelligence says. Longer term, however, the market depends on two customer types who are still new to China – younger social drinkers and middle-aged couples. They make up about half of the wine-drinking population but only one-third of sales by value.
5. COUNTRY OF ORIGIN ISN’T EVERYTHING. MARKETING MATTERS.
France still dominates the foreign wine market in most people’s minds but, increasingly, younger Chinese wine drinkers rely on recommendation, wine style and price to make decisions, Miller says.
6. FOREIGN WINE DRINKERS ARE WEALTHY, BUT FEW. GET IN PLACE FOR WHEN THEIR NUMBERS EXPLODE.
Treasury Wines says the tipping point for foreign wine purchases is represented by families with a household income of about 180,000 renminbi ($27,000). Research published by Credit Suisse in 2010 suggested that only the top 10 per cent of Chinese households had a per-capita income of 139,000 renminbi or more. Those in the 80 to 90 per cent bracket had a much lower 54,900 renminbi. This market has the potential to surge.
“When the affluent middle class couple gets in the habit of having a glass of wine on Wednesday night with their stir-fry, that’s when I think the market will really explode!” Davie says.
7. IT’S AN INTERESTED, CURIOUS MARKET THAT IS HUNGRY TO LEARN MORE.
“Talk to any wine education provider and you’ll quickly learn of the Chinese appetite for knowledge,” Miller says. “Whether it be to preserve face (a concept of self and how people view them) or merely for personal interest, when the Chinese learn they are dedicated and quick on the uptake.”
8. DON’T FORGET BASIC SALES STRATEGIES.
The number eight in Chinese is lucky, as it sounds similar to the words for “prosper” or “fortune”. Penfolds hasn’t disclosed the identity of the buyer of Ampoule No. 8 but does reveal that he or she is, predictably, Asian. There are some obvious ways to target your market.