Since we are discussing the Chinese wine market this week, I thought it would be interesting to share my personal observation of the Chinese wine market from a consumer's perspective.
Wine has always been a symbol of elegance and wealth in China since the economy opened up to the Western world in late 1970s. Today, wine is still very much a refined taste and a foreign concept. Considered as a luxury product among alcoholic beverages, wine is priced at a premium to beers and distilled Chinese liquors, especially French wines. It is quite common for a $10 bottle of regular Bordeaux wine, or even a sub-$5, non-AOC French wine (Vin de France), to retail at ~200-300 yuan ($30-50) in China, if not more.
Given the lack of wine knowledge of the general public, less savvy wine drinkers in China usually use a couple of (not so accurate) rules of thumb to guide their selection of wine. Consumers are most focused on region (France is best, then Italy/Spain/California), year (older is better), and design of the bottle (people love chateaux or extravagant looking coat of arms). Counterfeit is also a problem, although less severe in the non-ultra-premium market. However, given the general lack of trust of both the quality and the price of wines sold by local retailers, Chinese consumers love bringing back bottles of wine from duty-free shops when they travel abroad.
Buying wine (especially a good bottle at a fair price) has not been easy in China. In the off-line market, wine is mostly sold through local specialty retailers (alcohol & tobacco shops) and supermarkets. The specialty retailers' target clients are more often gift-givers (premium alcohol and tobacco are common gifts in China) than everyday wine drinkers; therefore, the price mark-up is quite significant. In supermarkets, there is usually a wide selection of wine, but the ones at affordable price points (~$10/bottle) are usually from low-quality local producers.
Recently, with the rise of online retail, wine shopping has become a lot easier and the markups significantly squeezed online. Government regulation is much friendlier in China than in the US (ID law is not enforced and no issue shipping across provincial lines), and many of the top retail websites (T-Mall by Alibaba, JD.com, etc.) offer a great selection of wines. Going forward, the online retail prowess of leading Chinese tech companies will make it tougher and tougher for off-line retailers to compete. It would be interesting to see how the market shakes out in the next couple of years.
Just want to share some interesting stats after reading your post:
ReplyDeleteIn 2016, more than 21 million people in China bought wine from various online stores. A new Wine Intelligence report suggests that almost half of wine drinkers buy online, making it the world’s largest and fastest growing e-commerce market.
JD.com reported that it had sold more than 30 million bottles of wine in 2016, 38% more than what it sold in 2015.
Amazon’s China division, Amazon China, No. 4 in the Internet Retailer 2016, had reported that its sales of imported wines grew 550% and average order value on wine products increased 40% in 2016.
Amazon's performance is particularly noticeable for American wineries like Frederick Family Vineyards. It might provide another alternative for them to tap into the rapidly growing Chinese market.