The New Yorker has an interesting story on Ningxia, an emerging wine region in China. It's one that connects with this week's theme of brand management, and draws parallels to Mondavi's brand development: https://www.newyorker.com/magazine/2018/03/12/can-wine-transform-chinas-countryside
The article describes the history of Ningxia, and juxtaposes its historical "backwardness" with its emergence as an increasingly successful wine-producing region. It's a story that shows a transformation of a community in the process of engaging with a completely foreign product.
Most interestingly, the article describes the multiplicity of purposes of wine producing for the region and its people. The author first describes how government edicts and politics influenced the wine import business in China. After the premier toasted the national congress with wine in 1996, for example, wine exports soared. In addition, the local governments wanted to support wine production, especially those along rivers that had the resources to grow grapes. In part, this was seen as a typical status symbol deriving from connections with Western products.
But wineries were also seen as positive for the powerful local governments. For one, the governments had strong incentives to grow the wine business big and fast to collect more taxes. In addition, the wineries would serve as tourist attractions as the Ningxia region chased the concept of "the Bordeaux of China". The region constructed faux chateaus that would serve as focal points for tourists, similar to Mondavi's plan to draw people into his winery with art and music.
Yet, the initial success in China was also an opportunity for counterfeit wines to surface. Often people would take old bottles and fill them up with fake wine. This was easy, because people didn't know what it was supposed to taste like, so fake producers could get away with it.
This story connects well with our theme this week of brand management. In particular, this region seems to be doing a good job defining itself as a superior place to grow wine. This is in part reflected in the awards it has won, such as the top award in its category at the Decanter World Wine Awards. Yet, it still struggles with how to define itself and price in a way that maximizes value.
One of the challenges of the region will be to focus the brand, and not fall into the trap of overextended brand expansion that Mondavi seems to have fallen into. This will be made more difficult as the region becomes more successful and more inexperienced copycats want to join the market. Perhaps the local or national government will get involved at some point to certify or classify wines to help world consumers determine quality – after all, China's authoritarian government would make this much easier than in Western countries.
Actually, several provinces in China have promulgated regional policies for local wine industries such as the “Regulation on the protection of Eastern Foot of Helan Mountain Wine Region” and the “Ningxia winery classification system” of Ningxia. However, compared with other main wine producing countries, which have a complete legal system, China still has a long way to go.
ReplyDeleteInstitutionally, the need to develop the Chinese domestic wine industry urges the expansion of a high-level education on wine. Until 2015, China had above 16 universities offering the major “Viticulture and Ecology Engineering” in the bachelor education, such as the Northwest Agriculture and Forest University and the China Agricultural University. And above 15 institutes for grape and wine research in several regions. In the meantime, a growing interest of professional wine knowledge and culture has been observed, especially among middle class in big cities. China has been one of the most important markets for the Wine & Spirit Education Trust Organization that specializes in wine education.
Thanks for sharing, David and Frank! Definitely an interesting read.
ReplyDeleteNingxia's five-tier classification system is modeled after the Bordeaux classification system with a few interesting tweaks. For starters, "[i]n order to qualify for the classification, a winery must meet a series of requirements, which include [...] having a main building that can be used for wine tourism." This is notably in line with the government's focus on promoting wine as a tourist attraction (to your point, David). Also unlike the Bordeaux classification system, the Ningxia system allows wineries to move up and down in the tiers and to apply to be included in the system. Additionally, "if a winery [i]s found to breach food safety rules 'or assist in making fake wines’, its classification status will be revoked, and the winery will not be allowed to apply again for 10 years." This also feels like a uniquely Chinese concern and tweak. It's no surprise that the classification system mirrors and augments many of the government's priorities in transforming Ningxia into a world-class wine region.
Source: https://www.decanterchina.com/en/news/ningxia-announces-wine-classification-system