China’s wine market: Quality over quantity

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The wine market in China has experienced remarkable growth and has become a crucial focus for many wine-producing countries. It has become a significant market for Bordeaux and Australia, among others, with increasing volumes of imports from various regions.

Wine education has played a pivotal role in this development, as demonstrated by the establishment of a dedicated office by the Wine & Spirit Education Trust (WSET) in Hong Kong to meet the rising demand for wine courses.

China’s wine market is undergoing significant changes as both producers and consumers shift their focus from quantity to quality. This evolution is driven by several factors that influence the consumption patterns and production strategies within the sector. Here are five reasons why quality is becoming a prevailing theme over quantity in China’s wine market:

  1. Rising Consumer Sophistication:
    • As Chinese consumers become more educated about wine, their preferences are shifting towards higher quality options. Exposure to global wine cultures through travel and media has raised expectations and interest in premium wines. Consumers are increasingly looking for wines that offer not just alcoholic content but also a refined taste and provenance.
  2. Health and Well-being:
    • There is a growing health consciousness among Chinese consumers who are now more concerned about the products they consume. Quality wines are often perceived as being made with fewer additives and lower sulfite levels, appealing to those who prioritize health and wellness. This trend is encouraging both local and international producers to emphasize the health aspects of their wines, such as organic or biodynamic certifications.
  3. Government push for Higher Standards:
    • The Chinese government has been implementing stricter regulations and standards in the wine industry to improve overall quality. These include regulations on the use of additives and pesticides, and support for geographical indications that help protect and promote region-specific wines known for high quality.
  4. Market Maturation:
    • As the market matures, the competition among domestic producers is pushing quality improvements as a way to differentiate from both local and international competitors. Established wine regions in China, such as Ningxia, are gaining reputations for producing high-quality wines that can compete on the world stage.
  5. Premium Brands Opportunities:
    • There is significant prestige associated with high-quality wines, which aligns with the luxury consumption trends prevalent among China’s affluent classes. Premium wines are increasingly seen as a status symbol, and brands that successfully market their products as high-end can tap into lucrative segments of the market.

These factors collectively underscore a pivotal shift in China’s wine industry, where quality is increasingly prized over quantity.

Opportunities for International Wine markers

China’s wine market want more quality wine now and Chinese consumers are more mature.

Despite the growth in China’s wine industry, several challenges impact its international reputation and market presence:

  • Limited International Exposure: Chinese wines still lack significant recognition on the global stage despite the increase in production and establishment of new vineyards.
  • Perceived as Expensive: The relatively high cost of Chinese wines is attributed to the industry’s novelty and the significant investments made by businessmen seeking quick returns.
  • Association with Prestige: In the domestic market, high prices are often linked with prestige and quality, positioning Chinese wines alongside expensive imported wines.
  • Export Challenges: While the domestic strategy aims to elevate the status of Chinese wines, it presents difficulties in exporting due to:
    • Intense competition from established wine regions.
    • Lack of an established reputation abroad.

Marketing is the Key in Wine

Tips to Market Wine Brands in China

  1. Understand the Market: Conduct thorough market research to gain insights into Chinese consumer preferences, trends, and buying behavior. Identify the target audience and tailor your marketing strategies accordingly.
  2. Establish a Strong Brand Image: Create a compelling and distinctive brand identity that resonates with Chinese consumers. Emphasize the unique qualities, heritage, and story behind your wine brand. Communicate the value proposition clearly to differentiate it from competitors.
  3. Adapt to Local Tastes: While preserving the authenticity of your wine, adapt to local preferences and tastes. Consider conducting tastings and gathering feedback from Chinese consumers to understand their preferences better. This insight can guide decisions regarding flavor profiles, labeling, and packaging.
  4. Build Relationships with Influencers: Collaborate with key opinion leaders, wine influencers, and sommeliers in China. These individuals have significant influence over consumer choices and can help raise awareness and credibility for your wine brand. Engage in partnerships, tastings, and events to leverage their networks and reach a wider audience.
  5. Leverage Digital Marketing: Utilize digital platforms to connect with Chinese consumers effectively. Establish a strong online presence through Chinese social media platforms such as WeChat, Weibo, and Douyin. Implement targeted digital marketing campaigns, including engaging content, videos, and promotions to generate brand awareness and drive conversions.
  6. Participate in Wine Events and Trade Shows: Take advantage of industry trade shows, exhibitions, and wine festivals in China. These events provide an excellent platform to showcase your wines, network with industry professionals, and engage with potential buyers and distributors.
  7. Collaborate with Local Distributors: Develop partnerships with reputable local importers and distributors who have extensive knowledge of the Chinese market. They can help navigate the complexities of distribution, logistics, and compliance, facilitating the entry of your wines into the Chinese market.
  8. Focus on Education and Consumer Engagement: Offer wine education programs, tastings, and events to educate Chinese consumers about your wines. Provide opportunities for them to experience and appreciate the unique qualities and flavors. Engage with consumers through online and offline channels, building a loyal customer base.
  9. Emphasize Value for Money: While prestige is important, consider offering wines at different price points to cater to various consumer segments. Highlight the value for money proposition of your wines, showcasing the quality and affordability compared to imported alternatives.
  10. Develop Long-Term Relationships: Cultivate long-term relationships with distributors, retailers, and consumers in China. Continually engage with them, listen to feedback, and adapt your strategies accordingly. Building trust and maintaining strong relationships will contribute to the long-term success of your wine brand in the Chinese market.

China Alcoholic Drinks Association

The Chairman of the China Alcoholic Drinks Association (CADA), Song Shuyu, has issued a stern warning about the wine consumption in China, stating that the industry has reached a bottleneck with no further room to retreat. Among all beverage categories, the wine industry has been the hardest hit during the pandemic, prompting concerns within the country’s alcoholic drinks industry.

In 2022, China’s wine industry faced several challenges that affected both domestic production and importation:

  • Decline in Domestic Production: Domestic wine production fell to 4.2 million hectoliters, continuing a trend of decline that has spanned a decade.
  • Reduction in Imports: The value of imported wines was cut in half compared to figures from 2018.
  • Overall Consumption Drop: Total wine consumption in China decreased to 8.8 million hectoliters, with an average annual decline of 2 million hectoliters since 2018.

These challenges have contributed to a broader bottleneck in the promotion and acceptance of wine in China, heavily impacting the industry:

  • Focus on Technical Aspects: An excessive emphasis on the technical details of wine, including complex food pairings and elaborate consumption rituals.
  • Perceived Snobbery: A culture of snobbery around wine tasting and appreciation has made wine seem inaccessible to a broader audience.

Additional Trends Impacting the Wine Industry in 2024:

  • Shift Towards Premium Products: Despite overall declines, there is a growing interest in premium wines among affluent consumers, driven by a desire for higher quality and exclusivity.
  • Rise of E-commerce: Online wine sales have seen significant growth, offering a new channel for reaching consumers directly and bypassing traditional retail constraints.
  • Local Wine Development: There is an increasing focus on promoting locally produced wines, which are gaining recognition for quality improvements and regional distinctiveness.
  • Sustainability Focus: Consumers are showing greater interest in sustainable and organic wines, aligning with global trends towards environmental consciousness.
  • Younger Consumer Base: Younger demographics are emerging as key consumers in the wine market, attracted by less traditional, more experimental wine products and marketing approaches.

These trends highlight the evolving dynamics within China’s wine market, suggesting that while traditional consumption patterns are challenged, new opportunities are emerging, particularly in niche and premium market segments.

The younger generation of drinkers in China

The younger generation of drinkers, in particular, seeks easy, approachable, and trendy beverage options, which have made traditional wine marketing and promotion strategies appear outdated and unappealing.

To address this bottleneck, Huo Xingsan, the head of CADA’s wine division, advocates for the development of an everyday and casual wine drinking culture. Simplifying and facilitating the purchase and consumption of wine for consumers is crucial, as it will help expand the overall wine market in China, he suggests.

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