Wine importers looking to enter the Chinese market need to temper their expectations, warns Jennifer Docherty MW, Hong Kong-based head of brand portfolio management for Summergate Fine Wines & Spirits. “Here are some reminders about the market,” she said. “China is a young market and the average consumer has very little, if any, knowledge about wine. There are fewer habitual occasions to drink wine in comparison to mature markets found in the West.”
While Western consumers may open a bottle of wine when they get home from work and enjoy a glass or two to unwind, Chinese consumers typically drink alcohol with friends. Beyond that, China is not an easy place to find quality distribution and to build brands – it can take many years of groundwork, plus a lot of investment. Docherty MW is concerned that too many wine producers believe that China is the “land of milk and honey, where producers can easily and consistently sell container loads of their entire range”.
It is, instead, “a fragmented market with several distinct channels and different levels of investment needed for each channel. There are also at least 20,000 producers being imported into China according to our initial look at customs import data.” Combine all this with the lack of consumer awareness about wine and wine brands, and “you have a very challenging environment to brand build, even if you are one of the top producers in your region”.
Her advice to producers is to understand the different channels – on-trade, off-trade, wholesale, e-commerce, direct-to-consumer – and decide where they want to operate before entering the market and trying to get a listing. Producers should also be aware that offering low price points is the best way to achieve volume sales.
However, she says that “despite the challenges, it is a young market and it will grow”.
This article first appeared in Issue 6, 2019 of Meininger's Wine Business International magazine, available by subscription in print or digital.