NewWorld wine, tastes so divine

Ready to get heady, China’s grow­ing mid­dle class finds new ways to fill the glass

China Daily (Canada) - - BUSINESS - ByWANG ZHUOQIONG wangzhuo­qiong@ chi­nadaily.com.cn

Wines from the New World — coun­tries such as Aus­tralia, New Zealand and Chile — are grow­ing a pres­ence in the re­cov­er­ing mar­ket in China.

For in­stance, Trea­sury Wine Es­tates, Aus­tralia’s largest wine­maker, is cash­ing in on the de­mand for good-value drinks in China.

Robert Foy, TWE’s man­ag­ing di­rec­tor for Asia, Europe, the Mid­dle East, Africa and Latin Amer­ica, said the com­pany expects tomake its brand Wolf Blass the top im­ported wine by sales vol­ume in China within five years.

Wine ap­pre­ci­a­tion, he said, now marks the mod­ern life­style of the grow­ing mid­dle class in­China. “Aware­ness and de­mand for NewWorld wines have definitely been on the rise in the past decade, which we ex­pect to con­tinue to grow in the com­ing time. In fact, we be­lieve the love for wine has just be­gun in China.”

TWE has seven brands in China, in­clud­ing Wolf Blass, Pen­folds and Beringer. Wolf Blass has re­cently an­nounced a part­ner­ship with bas­ket­ball league body NBA China, which will al­low the com­pany to reach more than 330 mil­lion po­ten­tial wine con­sumers in the coun­try.

Af­ter sig­nif­i­cant de­cline in vol­ume growth since 2012 due to the im­pact of the gov­ern­ment’s anti-ex­trav­a­gance cam­paign, the wine mar­ket is fi­nally show­ing signs of re­cov­ery, es­pe­cially with im­ports grow­ing. Do­mes­tic brands are fac­ing fierce com­pe­ti­tion in the mid-range, ac­cord­ing to a re­port in Oc­to­ber fromMin­tel Group Ltd, aUnited King­dom­based consumption con­sul­tancy firm.

China is the world’s largest wine-buy­ing coun­try. Dou­bledigit growth marked im­ports in the past five years, ac­cord­ing to in­dus­try data.

Af­ter a sharp fall from 18.7 per­cent year-on-year growth rate in 2012 to 1.4 per­cent in 2014, vol­ume growth in the wine mar­ket in China is es­ti­mated to bounce back to 4.6 per­cent in 2015, saidMin­tel.

Con­sumers in China are rel­a­tively open to new choices, said Foy. “They have high in­ter­est and cu­rios­ity in try­ing dif­fer­ent wine prod­ucts, so they are will­ing to try New World wines.

“De­spite sales slow­down in very high-end wines, peo­ple have switched to prod­ucts with a higher price-per­for­mance ra­tio but also of a rep­utable and con­sis­tent qual­ity.”

Foy said the de­mand for im­ported New World wines is still ex­tremely high and the lo­cal wine mar­ket is just be­gin­ning to tap the un­har­nessed po­ten­tial.

Car­rie Huang, a man­age­ment ex­ec­u­tive in Shang­hai, said she buys 12 bot­tles of wine a month. She prefers wine from theNewWorld. Its la­bels in English clearly ex­plain the con­sti­tu­tion of the wine and the taste. This, she said, helps her to se­lect the wine of her choice.

She said New World wine taste is direct and sim­ple com­pared with the com­pli­cated at­tributes of wine from the OldWorld— mainly wine-pro­duc­ing coun­tries in Europe. “Since I spendmy own money on wine, I choose wine that gives value for money.”

The main wine dis­tri­bu­tion chan­nels in China are su­per­mar­kets, hy­per­mar­kets, con­ve­nience stores and on­line re­tail­ers. TWE has signed dis­tri­bu­tion deals with se­lect on­line re­tail­ers in China such as JD.com Inc, Alibaba Group Hold­ing Ltd’s Tmall and wangjiu.com.

“E-commerce is an im­por­tant chan­nel for us to ex­pand the dis­tri­bu­tion of our wines be­yond first- tier cities into the hands of con­sumers that rely on on­line shop­ping in the sec­on­dand third-tier cities,” said Foy.

The com­pany is also lev­er­ag­ing so­cial me­dia plat­forms such asWeChat andWeibo to reach con­sumers and en­sure so­cial me­dia en­gage­ment.

How­ever, the chal­lenge for TWE is that wine drinkers in China switch from one va­ri­ety or brand to an­other rather quickly.

It is also keen to cap­i­tal­ize on the “pre­mi­u­miza­tion ef­fect” in which drinkers move up its brand port­fo­lio as their in­comes grow and knowl­edge of wine in­creases, said Foy.

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