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Case Study: How to Be Successful in the China Wine Market

Dragon Social > Doing Business in China  > China Market Insights  > Case Study: How to Be Successful in the China Wine Market
china wine market, china wine export, china wine import

Case Study: How to Be Successful in the China Wine Market

One of the most successful industries to make its mark in China has certainly been food and beverages, with wine being a particularly successful example. Professionals in the wine industry certainly understand the value of the China market. In fact, the sector as a whole has been growing. The latest report shows that the global wine market will reach US$402 billion by 2022. Although the market is growing worldwide, Asia, with China being the largest contributor, is growing at a far more rapid rate.



In this post, we will go through the details of the successful case of Rutherglen Estates’ Rayah entering the China wine market.



Why choose the China Wine Market?



First of all, the size of the market is notably large. According to the latest China wine market statistics, the country is expected to generate US$24,022.3 million in 2018. Analysts expect the figure to grow by 5.0% every year. Although the United States still produces the most sales revenue, China is rapidly gaining.



China wine market, China wine statistics, china wine report

The revenue statistics of the China wine industry. Comparing with the traditional market, China is very competitive.



The China wine consumption statistics are impressive as well. The total wine imports to the region reached 407.37 million liters in the first seven months of 2017. Regarding China’s wine import statistics, the trades were worth US$1.475 billion and the volume has been increasing 15.49% year-on-year.



When it comes to playing the role of both wine producers and consumers, the United States, France, and Australia are all well-established countries. Yet China is gradually gaining on these well-entrenched countries. In 2017, Australia exported 63% of its wine to China while France’s wine exports hold a 42.6% market share in China’s wine imports.



The benefits of entering China’s wine market are undeniable. In our case study, the director of Rutherglen Estates, Mr. Cheung, described China wine market with a statement he read years ago:


What are the Keys to Succeed in the China Wine Market?



Mr. Cheung is currently working for Rutherglen Estates in Australia as the director. He is experienced in promoting wine to Chinese consumers and pointed out several differences between the western and Chinese wine lovers. If you want your business to earn a presence in the country, here are the items you need to know.



1.Take Advantages of the Growing Young Chinese Middle Class



Rutherglen Estates’ Rayah entered China in 2013. At the time, the market was still at an early stage of development. Mr. Cheung recalled the cooperators in China Food & Drinks Fair mostly were middle-aged men. Their knowledge was inadequate and they only aimed to find a cheap wine source.



China wine market, china wine import, australian wine export to china

Rutherglen Estates’ Rayah entered China and was extremely successful.



Situations changed in the last year though. Mr. Cheung led the team to participate in the roadshow of the 2017 Australian Wine Region in China. The majority of cooperators were young people aged from 20 to 30. They were familiar with wine knowledge and held a great awareness of various global brand names.



Mr. Cheung points out the trend of the evolving middle-class. The Chinese wine industry leaders were not the only group becoming younger and richer.



The Rising High-end Market



With the high-speed economic development in China, young people can now afford and adopt the habit of drinking wine. They appreciate different wine categories, grape varieties, and country products through international exposure gained in their travels abroad or through messaging received at home. These consumers are eager to find suitable products to satisfy their tastes, and companies can gain immense wealth from the rising high-end market.



Customers in the high-end wine market are often from the middle class. They are more willing to accept expensive wines. “Some end customers directly ordered our top brands. Each bottle usually prices at around RMB$880 (US$138)“, Mr. Cheung added. He believes that the high-end wine market will continue to prosper with the changing demographics.



Want to be successful in the China wine market? It is time to customize your marketing strategies to grasp the opportunity. It is crucial to analyze the target customers and brand positions before developing products for the Chinese market.



(Read more: Everything You Need To Know About The Chinese Middle Class)



2.Utilize Online & Offline Distribution Channels



The younger generation in China prefers to search wine-related information online. Mr. Cheung mentioned how the Internet made knowledge transparent and global. It is essential for wine companies to use digital and social media marketing for image building and brand awareness.


On the other hand, under the impact of E-commerce, some Chinese consumers tend to shop online even for wine. Undoubtedly, China wine sales still happen mostly offline, but online sales can also enable foreign wine brands to gain publicity.



New Way to Promote Wine Sales in Restaurant



For the offline distribution channel, especially food and beverage, Mr. Cheung suggests allowing customers to taste diverse wine products at lower prices. It is more appropriate to have small bottled wines to boost sales. “As a winery manager, there is not much difference between the cost of a small bottle of 350ml and that of a traditional 750ml,” said Mr. Cheung. “Reducing the size of a bottle of wine is now quite a common practice in Australian restaurants. ”



China wine market, chinese wine lovers, china wine sales

Companies can consider the alternative way of doing wine promotion in restaurants.



New customers in the Mainland market are likely to be more interested in this form of selling. Not everyone is able to drink at a party. Each person can separately order their own products according to their needs. Restaurants can change wine brands occasionally to control daily stocks. Companies can, therefore, better monitor the opening of bottles. Mr. Cheung encouraged firms to try out different ways to promote wines in China.



3.Host Diverse events



Mr. Cheung mentioned the way of Rutherglen Estates’ Rayah entering China is different from other brands. Many shareholders of the Rayah are Mainland enterprises. The stabilized sales channels and networking of hundreds of branches made B2B sales the main force.



For wine brands in a similar position, it is vital to join or even host large B2B events. Mr. Cheung stated the focus of sales training should be modified to “How to improve the wine knowledge of salesman to help facilitate transactions”.



Mr. Cheung raised another significant idea as well. Learning from Hong Kong businessmen, businesses can refer to a famous “Wine Dinner” model. Companies regularly invite target customers, usually middle and high-end, to have dinner in fine restaurants. There are mixed combinations of dishes and wines. During the meal, participants discuss the characteristics of the wine with each other.



china wine market, wine dinners, fine dining

It is often a good way to promote wine with fine dining.



Mr. Cheung has already organized many wine dinners in Guangzhou. They were all remarkably successful with full bookings; three tables with 30 to 36 people, each paying a fee of RMB$500 (US$78). Mr. Cheung concluded, “Wine dinners are especially suitable for promoting new liquor.”



4.Protect the Brand



Mr. Cheung emphasized heavily the importance of brand registration.



Penfolds entered China wine market earlier and quickly became a popular Australian brand in Mainland. Their three series of BIN 128, 389 and 407 are the most prominent ones. Nevertheless, renowned names led to counterfeit brands. The immature regulations in China prompted similar names or even counterfeit liquors to appear.



china wine market, australian wine export to china, china wine import, Penfold wine

Penfolds’ Bin series are still the popular wine in China. However, it is important for companies to register the brands.



The concept of intellectual property in China is weak. Trademark registration is a must for wine brands to protect their customers and their reputation. Mr. Cheung stressed: “You need to pay attention to the registration and maintenance of brands in China. It is to better protect the interests of your company.”


5.Provide Wine Appreciation Courses & Trips



The wine training market also rises recently. Mr. Cheung reminded businesses that traditional wine some training courses, such as WSET, may not suit the Chinese customers.



“Regarding my observation, those who are most keen on wine knowledge in China are businessmen (Read more). They like wines simply because of personal preferences. They do not care about obtaining a professional certification. Instead, they treasure the chance of enhancing their taste. Gaining wine knowledge is the way to earn recognition from others as more decent, visionary, and knowledgeable. They also desire a Wine Appreciation Course rather than a sommelier certification.” said Mr. Cheung.



China wine market, wine appreciation, wine tasting

Wine appreciation courses are popular among Chinese businessman.



In recent years, Mr. Cheung also managed wine tasting delegations for China consumers. These trips usually lasted for 8 days. He would bring groups of 15 to 20 people to visit their three main Australia wineries for wine tastings.



Conclusion on the Case Study & China Wine Market



From 2013 to 2017, Mr. Cheung noticed the rapid changes in China wine industry. The market grew more than 30% annually over the previous three years.



If you want your brand to gain market share in China, you should pay attention to the details in the case of Rutherglen Estates. Mr. Cheung’s advice is remarkably helpful.



We will be keeping a close eye on the developments and trends in the China wine market. If you have any questions regarding how to market your wine brands to China, do not hesitate to contact the Dragon Social team!

Yoyo Ng

A passionate marketer who wish to pursue a career in China marketing. Studied at The Hong Kong University of Science and Technology. Currently working in the Dragon Social team to collaborate with professionals.

1 Comment
  • Avatar
    Kristin Paterson
    Posted at 3:09 pm, April 17, 2018

    Great article for beginner of wine market blog or thinking about starting
    Thanks for sharing.

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