On average, Chinese drink very little wine. But for a bottle, connoisseurs pay up to 22,000 pounds.
Shanghai The small booklet has over 125 pages. Listed inside are over 865 wines, ranging from 40 to almost 22,000 pounds. This is not the sales list of a medium-sized wine producer; it is the wine list or rather wine menu of Napa Wine Bar & Kitchen in Shanghai, one of the hip gourmet restaurants in the Chinese metropolis.
Its lower floor resembles more a museum than a restaurant, with around 14,000 bottles on display. Expensive bottles are stored in temperature-controlled wooden containers, which are opened and closed with large turnstiles like a bank vault.
However the true size of the restaurant is signaled by a 15-liter wine bottle, also known as a Nebuchadnezzar. The bottle was imported from the French Bordeaux winery Cos d’Estournel and is a 2016 vintage. It can be uncorked for approximately 10,000 pounds. Customers can even rent a small lockable mini cellar for around 27,000 pounds. Of course, only for bottles that were previously purchased in the restaurant.
No other country in the world currently has more influence over the wine industry than China – although there is currently little wine consumption per capita. However, China’s influence has become clear at the Prowine Expo in Shanghai.
“China is at the forefront of new developing wine markets” says Robert Joseph, a British wine consultant with tremendous international experience.
Sales in China are rapidly growing, as can be seen by the Chinese branch of “1919” sales. Founded in 2010, “1919” now sells wine and spirits in over 1200 branches worldwide. In 2017, “1919” revenue reached 420 million pounds. The company reached a net profit of over 45 million pounds. However a different figure is far more interesting. While in Europe same day delivery is celebrated as a miraculous achievement of modern technology, in China the company’s name is understood literally: A bottle of wine is delivered within 19 minutes.
Unlike in Europe the division between the production and sale of wine is not as prominent in China. For example, the Great Wall Group, who claims to be Chinese market leader, has opened 400 stores within four years while also maintaining various wineries. In the wine cellar of the Chateau Huaxia of the Great Wall alone over 20,000 oak barrels are stored.
Based on this strong domestic market presence, an obvious question arises for foreign wine producers: Is it still worthwhile to enter the market?
Experts say yes. Because even small players can receive great attention in China.
How much wine do Chinese consume on average?
On average Chinese drink 1.3 liters of wine a year, of which almost 90 percent is red wine. While compared with European countries this is a relatively low consumption, given China’s population of over 1.3 billion people the overall consumption rate is enormous. With an overall consumption of 1.86 billion bottles, China became the world’s largest market for red wine in 2013.
The industry’s enthusiasm for the China is greater than ever. “China is currently and for the next three years, the most attractive market,” says Professor Simone Loosen of the University of Geisenheim, the central training for wine in Germany. Other new markets include South Korea and Poland, followed by Russia, Hong Kong, Japan and Australia.
What are Europe’s biggest challenges in the Chinese market?
In the opinion of Simone Loosen, the biggest challenge European wine producers are facing over the next few years will be to overcome geographical and cultural differences with the Asian markets. His findings are based on an international survey commissioned by the Prowein expo, surveying 2,300 experts from 46 countries on international wine markets, marketing trends, the development of online sales of wine and the economic situation. It is considered one of the most authoritative sources on the international wine market.
Messe Düsseldorf, which hosts the world’s leading trade fair Prowein, is also represented in Asia and reports significantly higher numbers of exhibitors and visitors. In addition to the Prowein Shanghai, the company now also alternately organises a trade fair in Hong Kong and Singapore. Exhibition Director Marius Berlemann toured for a year in China’s different regions to promote the fair.
The European industry’s hope for increasing sales in China is based on two main aspects: One of them is the younger generation. “We see an increasing demand from younger wine lovers,” confirms Castle Li of Great Wall. “More women than men want to drink wine and they especially demand premium wines.”
Chinese wine consumers have different preferences for premium products compared to their European counterparts. While in Europe mostly older wine lovers consume these wines, in China 20- to 30-year-olds order bottles of wine or champagne, which also cost well over 100 pounds. Chinese consumers primarily order European wine, with French wines topping the list. At Ruby Red, one of China’s leading premium wine merchants, French wines have a market share of 40 percent.
The second aspect: the growing European influence on China. “This gives European producers great market opportunities,” says Giorgio Vinciguerra, CEO of Beijing Guala Closures. The Italian lives in China and sells bottle caps.
How can European companies advertise their products in China effectively?
Wine sales in China rely on a different communication strategy: independent reporting, an essential feature of press coverage in Europe, is less important in China. XU Wei is one of China’s most important wine influencers. On his WeChat account “Xiapi” he keeps his 1.5 million followers updated about the latest wine trends.
Many of Xu’s videos feature products from manufacturers such as the US group Mondavi or Bordeaux icon Rothschild Lafite. Xu has marketing agreements with them. Xu also retails the wines of his sponsors. “But I do not earn as much with selling wine,” says the influencers. He earns significantly more through his sponsorship agreements. Recently Xu won the award for the best online story of the Australian Winery Association.
If you are interested in exploring opportunities in the Chinese wine market, get in touch with us today.