As we said previously, here below the main differences between HK and China:
- Zero tax
- 350 importers
- Highly fragmented
- No license needed to open a trade company
- Keep expanding
- Important for the Auction market
- 48% tax
- Keep expanding
- Mid/Market growth
- Counterfeit market still big
- Green wine market
Hong Kong: 78% of the importers have between 1 to 2 sales people
Shanghai: 44% of the importers have between 1 to 10 sales people
What influence the wine sales in Hong Kong and China the most?
In HK, the wine market is more influenced by personal recommendations rather than social media, while the Medals gained by wines have still a good effect on the wine sales.
In China, on the other hand, social medias plays an important role and the online business is predominant even though the price range and quality of wines sold through those platforms are still very low.
In addition, we can also pick a second tire city as Chengdu as a city that is growing in the wine market even though it is still mostly based in the trading market, so very low entry level wines.
How to place your product in china
Let’s take an overlook of the situation: the Chinese market has an incredible potential but also lack of inexperience: the main cities in china for wine knowledge and more open minded are 2: Beijing and Shanghai.
The reasons are quite obvious: Shanghai, more than Beijing, is an international city where the influence of the West plays an important role in the development of the wine market, as the Chinese living in it are more involved with foreigners coming from all over the world, threfore they get to know new things and learn new way to live life which one is , of course, drinking good wines.
The market is, however, still quite green and positioning your product isn’t easy. In the past we had many, too many unknown products filling up the market with bargains and very cheap wines, moreover the Chinese feel still quite confused on which wine and which products buying from, ending up selecting the bottle by the price. The confusion reign quite strong everywhere and least but not last, remember; most of Chinese do not read our alphabet, so be aware of this.
French wines still dominate the scene; first because they have introduced their wines long time ago and now the population is quite confident about them; they approximately know French wines and wine regions too: what I have found very interesting is also that in the restaurant wine lists but even in many websites of Asian importers is that the when it comes to list the Countries in their portfolio on the first page they start like this: Bordeaux, Burgundy, Champagne then Spain, Italy, Germany and so on; I bet you have already noticed that even in China the people know already the French wine regions and not just the country name! Second because most of the wealthiest Chinese have shares or own a Chateau in Bordeaux, Bourgogne or Champagne, hence French wines had and are having a big help from them. Beside French wines we have Germany, Australia, Spain, Chile because they are introducing to the market very soft, fresh and approachable/easy wines, which are easier and closer to the Chinese palate.
The 4 keys to place your products are ( this is a kind of worldwide rule ) :
- PRODUCT - Approachable, to meet the Chinese palate.
- PLACE – Pick the Area/City to introduce your wine and work on it.
- PEOPLE – Medium / high class (the medium class is the key)
- PRICE – Affordable, especially if the country of origin and wine is not know.
One of the biggest problems in the Chinese market is collecting data. There is no precise way or method or a specific organization that delivers correct and useful figures that can help anyone in this business to forecast accurate projections. Building up a business in a country where data is missing or is very hard to get, add always an important risk to it. Moreover, we are facing the fact that wine knowledge, wine culture, and wine tradition are quite inexistent therefore placing a specific product like, for instance, a good wine from Puglia require a lot of efforts in wine educations , marketing, PR, all tools that help the consumers to recognize your brand as trustworthy, good and real.
To use these tools in an efficient way, we have to ask ourselves the following questions and acting according:
- Do they know you?
- Do they know your country of origin?
- Do they know your products?
- Do they know where they can get your products?
Imagine to buy a toothpaste, everytime you wonder yourself how to sell a wine.
Type “toothpaste” in Tmall or Taobao or in any western website and you will see thousands of different results; how will you pick the best one or just a good one?
Now, imagine having to purchase a wine: how will you do it when the variables are so much more complex than choosing good toothpaste?
To answer this question, we have to go through the questions above and acting according to answer them.
Chinese love brands
- Totality of Chinese who buy wines go for the brand they know more, which they feel more comfortable with (mental availability).
- They have to recognize you as a trustworthy brand.
- They want to feel special purchasing your brand.
- Friends & Social Media: high influence.
- Price: still a good driven sales point.
Gifting products: when they buy wines, they love always to have a small gift included in the package. It must be a simple but useful one. Low profile.
Matching wine with food
Another important step to create more wine culture and also sales (ndr) is slowing down to promote the matching of wine with food. We all, in the West, the habit to have just 1 glass of wine, either red or white, alone after a meal or during the day just to feel relaxed and enjoying it. The real problem to it is that Chinese think that drinking wine, beer without eating is unhealthy. However, the APERITIF is a growing market and slowly we will see things changing in the future but we need to pursue it and promoting it much more. To be clear, i am not saying to don't promote food&Wine pairing, but to promote also the other way around.
Tier 2-3-4 cities
In general, the first tire cities such as Shanghai, Beijing, ( i would take out Guangzhou and Shenzhen for the purpose to open the chinese market for now ) are the most important cities for the wine consumptions and sales in China. Shanghai and Beijing are quite crowded cities though, instead, we see great potentials in tire cities 2-3-4, mostly concentrated in the west of China, less developed but open minded with no stereotypes, such as Chengdu. We should look into them and plan how to reach them first.
When we speak about e-commerce in China everybody get excited, however we should plan our entrance placing our brand and products carefully.
TMall / TAO BAO
- Most important web sites for wine sales in China.
- We can create our own on-line wine shop.
- Massive visibility.
- Easy format and very approachable
- Can create confusion.
- Too many products.
- Too many cheap wines.
- Low Price/ Entry level wines are still saturating the online sales.
The online market in China is in a very rapid evolution/ revolution, hence, the data and figures can change rapidly. The medium class is slowly becoming more and more important for the economy and with it the, technology put into E-commerce. We are still in the first stages of a rapid increase of wine consumption in China where the Ecommerce will play an important role.
The price point of the online sales has moved from a 59 rnb to 150 rnb price per bottle to a 500 rnb per bottle in 3 years, which show us an important increase of the price point that the consumers are willing to pay for a bottle of wine.
The Logistic also play an important role, with software that can help to organize your express delivery simply by app. 24 hours to 3 days max is the time a Chinese consumer is willing to wait for a delivery.
Why do people buy wine online?
- Because it’s cheaper than buying them through retailers.
- It’s easier and quicker.
- Because they can read information about the wine they are going to purchase.
The hard part of the online business is:
- Getting visitors.
- Need to open a flag shop that helps to introduce your website and social media.
- Getting in touch with KOL
- Writing articles regarding the wines, history, focused on the educational side.
- Use easy language and an easy format.
Important: Opening a flag shop help to the branding. Also, it helps to getting in touch with the final consumer, organize wine trainings and educational programs.
The sales will come also from other type of platforms :
- Friends – word of mouth.
- Group consumptions.
We need to be prepared to engage our customers with:
- Internal sales and wine trainings.
- Be confident with the products we sell.
- Spread the confidence to our customers.
Key opinion Leaders ( KOL):
- Very much important to influence the retailers and consumers.
- Bloggers, Sommeliers, Celebrities.
Top 3 trends in the chinese wine BUSINESS
What the consumers like more and what can we do to help and lead the wine sales in China?
Here below 2 lists, the first one that say what are the top trends by consumers and the second one are the 3 helpful tools to help our customers (F&B, retailers ) to sell more wines:
COSTUMERS TOP TRENDS:
- French, Bordeaux/Burgundy, big brands, light/medium body.
- Italian wines-Spanish wines, Corporate wine dinners, growing knowledge.
- Millenials, wine programs/ education, product diversity.
HELPFUL TOOLS :
- Wine Education, Master classes, Wine dinners, supply with continuity (allocation).
- Wine trips, Promotions, By the glass diversity, fair price point.
- Private Label*, Incentives.
Amazon point of view
Amazon is the largest online retailer in the world and recently they have opened to the wine business with the possibility to advertise your product, open your online shop, which linked with the express delivery service and logistic strength, it can be a big success for them in the nearest future.
They started this new branch of the business in China and they are very trustful on the outcomes.
The most important tool to advertise your online shops, products and your business in China according to AMAZON CHINA are:
- Media platform
- Create atmosphere and hype around your brand.
- Use the QR code.
- Wine ratings from Chinese and non-Chinese wine KOL.
China is an amazing and challenging market for all of us working in the wine industry with wine professionals, distributors, importers and also Sommeliers and entrepreneurs with some of them working for years in China whom are still figuring out the constant challenges of a market that every year change, that is growing, where the wines is slowly creating is place but always challenged by old traditions and misconceptions which are making the develop of the wine market very tough.
However, the Chinese market is the most exciting, fast growing and profitable for the future years, green areas where wine connoisseurs and moreover, wine importers, have an important role on the education and development of a more knowledgeable clientele which is found already in the millennials.
The time frame is 10 years, a time frame where we will see the increasing of wine consumption, knowledge, to a more open minded market where we have the chances to become the forgers of a new wine market, through education and wine programs, social media and KOL, good marketing campaign and PR machine.
And the time to be there IS NOW.