Written by Frankie Zhao is founder of Millevini Wine Trade Co. Ltd. and was vice president of Wangjiu.com, he is a prominent consultant in the Chinese wine market and judge and writer of wine. He has been invited as a judge to many international wine competitions such as the Concours Mondial de Bruxelles and Tempranillo al Mundo.
Frankie is a WSET teacher and member of the Institute of Wines and Spirits. He holds several tasting and appreciation courses at Chinese Agriculture University and Beijing Agriculture College and other training facilities. Since 2009 he has been appointed official educator and ambassador of both Bordeaux and Burgundy.
Frankie, you are a well-known Italian wine expert in China, can you tell us how your adventure with Italian enology started?
I want to share my story, even if a part of it has already been told in other articles long ago. In 1999 I was an Air China aeronautical engineer, I was on a business trip to California, in the United States, and I bought a bottle of Chianti Classico Riserva 1994.
At the time I didn’t know anything about Italian wines, but I was already passionate about wines. In California, I discovered “White Zinfandel”, which is a sweet and perfect wine to drink in the summer with an affordable price. It was in fact possible to find this wine in any supermarket for around $ 4. Just before I got home, I decided to buy a gift for my family, obviously a bottle of white Zinfandel, but I also wanted to buy something of a higher level. I went through the Safeway shelves, and a bottle caught my attention. I saw the word “Classico” on the label and then the word “Riserva”, it made me think of a “reserved” wine, the combination sounded elegant, so I paid it $ 15 and took it home. I tasted it with my family – obviously I drank more than anyone else. The words “elegant”, “velvety”, “perfumed” to describe this wine did not come to mind as it happens now, I simply found it a damn good liquid that changed flavor on my palate, I did not hold it long in the mouth to analyze it because I couldn’t stop drinking. Time has stopped and the nectar has started to flow.
I wrote the name of the wine and gave it to a colleague of mine who would travel to the United States, I said “find this wine for me from Safeway”. Unfortunately, he brought me a different bottle, a Californian Sangiovese, a different taste and that did not give me the same experience. This way began my relationship of glasses with Italian wine, from an anonymous Chianti Classico Riserva ’94.
In 2002, I was at an Italian wine tasting at the Beijing Hilton, and I met my current business partner Roberto Fabris. He was the director of Guerrieri Rizzardi. There was no immediate collaboration, but we started working together a few years later.
Italy is one of the traditional wine producers and definitely among the largest producers in the world. The performance of Italian wine is good in most markets. China is a sad exception, why do you think Italian wine is not so popular in China?
Once a guy asked me: “Why Chinese people think that French wines are the best in the world rather than Italian wines”. My answer was: “Thirty years ago, the Chinese also thought that Pierre Cardin was the best men’s clothing available in the world, then they discovered that Salvatore Ferragamo and Giorgio Armani exist”.
I understand that some Italian producers and marketers are discouraged by the lack of improvements. We need to understand why it happened and how it happened. There are many factors that lead to the current state, these aspects come to mind:
a. France symbolizes European culture in the mind of the Chinese. Having lived a difficult life for so long, the Chinese have an obsession with the foreign lifestyle, in which the United States represents democracy and technology, Europe represents fashion, quality of life and civilization. For most Chinese people, France is the icon of European culture. When they think of luxury, the first thought they have is for France.
b. There are many connections between France and China. France was the first country to establish diplomatic relations with China. China has sent more students to France than to Italy. There are also more commercial relations between France and China. France is the first European frontier for most Chinese people.
c. Italy has less economic power and Italian wineries are mostly small family businesses. It is a little difficult for them to penetrate emerging markets like China.
d. Italian wines are much more complicated for Chinese consumers to understand than French wine. There are over 500 grape varieties, 20 regions, over 400 DOC / DOCG, the majority with unpronounceable names, looks scary, doesn’t it? If we dig deeper, French wines are also complicated, but there is a simpler approach: Bordeaux, Bourgogne, Champagne, it’s quite easy. Italy does not have that sub generic category to be used in the Chinese market. Prosecco and Pinot Grigio are popular in the United States and the United Kingdom, but not yet in China. We can only hope that Moscato can be the key to opening the doors of Italian wines to the Chinese consumer.
The Covid19 pandemic has changed people’s habits, the market seems to be rapidly shifting from offline to online and e-commerce platforms are exploding. Is this the end of traditional distribution?
This shift has already started before Covid19. The Chinese distribution system is changing and will increasingly move to e-commerce. Covid19 has slowed down all markets, including the online one, but it has also radically changed the market shares. This change happened so quickly due to the flexible nature of distribution in China, in fact, there are no licensing limits like in the United States here. The importers present themselves as both distributors and sellers. If a distributor expands his business well, he can import wines on his own. Therefore, Chinese importers / distributors / retailers are very flexible in adapting to the market and responding quickly to demand. They don’t have a fixed idea on how to do business, they are just looking for the fastest way to sell wines.
What do you think will be the future of wine fairs? Will they still be the main tool for B2B exchanges? Or will the new situation only lead to digital connections?
Wine fairs will still be a useful tool for expanding the business, it certainly depends on who organizes it and for whom. The problem with Chinese wine fairs is that the market is not capable of satisfying the large number of events. Another problem is that the big players in the wine market in China normally don’t need to go to fairs, they usually have a large budget and better ways to market their wines. On the other hand, small producers or the so-called “boutique wineries” rely on the fair hoping to meet buyers, because they have less marketing budgets and fewer ways of communicating with consumers. If you put these 2 factors together, we are driven to think about wine fairs from another perspective.
You are a famous Wine Educator. “Education is the best way to promote wine in China” do you agree with this sentence?
Yes and no. I don’t think there is a universal way to promote wines in China, each strategy has its advantages and disadvantages. Education can bring the basic knowledge of the consumer, encourage him, increase curiosity. A big “yes” therefore regarding these factors.
At the same time, some people consider “wine tasting” as a fun event, but not a way to understand more about wines and find out what they like. Ideally, wine should be a part of daily life that can be enjoyed in every way and every moment rather during a blind tasting.
You are also a wine importer and have a partnership with a winery in Italy. We can say that you are on the front line when it comes to selling wines. Do you think e-commerce is a valuable channel for selling wine? What are the risks when it comes to selling online?
It depends on the type of wines you sell. E-commerce is a quick way to sell particular wines, which are well-branded, well-priced and well-informative. I will give you two very different but both winning examples: Penfolds and an anonymous sweet and cheap sparkling wine. Penfolds is an established brand. I think it is the wine brand n. 1 in China. Selling through Taobao, T-mall, JD greatly expands its distribution and accessibility. But even a sweet and cheap sparkling wine can attract attention, thanks to the competitive price or an aggressive discount. But these wines are intended for more price sensitive consumers rather than those seeking uniqueness. We cannot expect platforms like T-Mall or JD to help a brand establish itself if it isn’t already, and occasionally these platforms can even damage the brand. There are often aggressive discounts, the sales strategies are oversimplified. I always think platforms like Taobao, T-mall and JD are just a bloody battlefield, where there won’t be a real winner.
How important is it for a winery to have an official WeChat account?
If you want to communicate directly with the Chinese consumer, it is very important. Companies can create it through a reliable agency, or through their importer if they have one. WeChat is quite multifunctional and it’s not just a messaging software, it’s like having Twitter, YouTube, Apple Pay and many other social media, all in one platform. It is important to know it and be known on this platform.
Chinese consumers have changed a lot in a short period of time. At this moment some wine regions are more popular (for example Veneto, Piedmont, Sicily, Tuscany). Is there room for other Italian regions in the future?
Of course, the rich culture and diversity of Italian wines can offer a lot to the Chinese market which is thirsty and demanding. Together with the 4 regions you mentioned, Puglia is improving a lot thanks to its rich body wines and affordable price. Friuli and South Tyrol also began to take part in the games. There is always room for other regions, as long as producers don’t think of replicating the same strategy they used in the United States. But please let’s not go too far like Molise or Calabria.
If you could give an Italian wine producer 3 good tips to increase his performance in China, what would they be?
Communicate with Chinese consumers. Positive spirit and low expectations. Watch out for bluffs.
Communication is always important to promote yourself. Communicate with Chinese consumers to all intents and purposes, don’t just say what your product is, where you come from, which grape you used; but also, what is your cultural background, why you are producing wines like that. If you are a big producer, leverage the brand, if you are a small one emphasizes your identity. You also need to understand Chinese people and Chinese culture, what your consumers are really looking for.
Positive spirit and low expectations. With this I want to tell Italian producers and marketers to act more in promotion, in communication, but also that the results will not be immediate. Some producers get results faster, but this is not always the case.
Watch out for bluffs, because the producers shall understand that the Chinese market is like a global playground, where you have to compete with all types of players, from all over the world. We all must have a global vision and understand what our real position is on the playing field. It is not wise to deceive buyers but also be careful not to be deceived in turn. Many have been blinded by the enormous potential of the Chinese market and by certain types of buyers. Always do research, find out more about who wants to buy your products, do a risk analysis, only in this way will you avoid being fooled.