Alcoholic products have always played a fundamental role in China since, just like in Italy, their consumption is part of this millenary culture. Thanks to the recent influence of Western consumption, wine has been introduced into this large market which is today in fifth position among the largest in the world for wine consumption.
Despite the obstacles due to the Covid-19 pandemic (in the first seven months of 2022 the total volumes of wine were -15% lower than in the same period compared to 2021) the wines imported into China enjoyed a modest resilience and still have the citation market. It is good to keep in mind that compared to the more established markets, Chinese consumers are still open to the knowledge of new wines. Furthermore, with the increase in the population of the middle class , there will be an increase in consumers willing to have a deep knowledge of wine and therefore imported wine will increase in popularity in the coming years.
Analysis of the Chinese wine consumer
China cannot be considered a single market (we talk about it very well here . Wine consumers are mainly found in big cities north (around Beijing), east (Shanghai area) and south (Guangzhou, Hong Kong) of China. Al on the contrary, wine is still struggling to occupy a prominent position in the western China market and in the cities surrounding it.
Each area has its own particularities and is suitable for a certain type of product:
- In Beijing, wine is mainly consumed by senior government officials, and not so much by the middle class, and therefore they are preferred more expensive and noble wines.
- In the east of China, including Shanghai, the middle class dominates the scene along with a large community of foreigners. who consumes wine on a regular basis and prefers mid-range products. The climate in these regions is much warmer and therefore more interest in white and fruity wines has developed during the ‘summer.
What wine is consumed in China
Overall, wine consumption in China has not yet reached full maturity and, as a result, quality is not yet a discriminating factor in choice and tastes for wine are not as refined as in the West. Chinese consumers prefer red wine because they believe it has beneficial qualities and positive connotations linked to color, such as health and leisure.
The consumption of white wine has never climbed the charts (except for some areas already mentioned) mainly due to the low consumption of cold drinks in Chinese culture. A 2021 report published by AliResearch showed how the latter are actually taking foot, thanks to the interest of young Chinese women.
Consumer demographic analysis
Demographics of the Chinese wine drinking population have participated in a significant change since 2012. Particularly among young people and among women wine drinkers This last group represented only one third of the entire wine drinking population in China in 2012 and since 2015 this figure has increased by 50%. Second Wine Intelligence , female wine consumption will increase in the coming years.
With respect to age, we can create 3 groups based on consumption habits:
- Young : young people aged 18-29 are bold enough to test new products on the market. Over 40% of the wine imported into China is consumed by this age group.
- Adults : people in the age group between 30 and 45, have an major purchases, but they are very careful with the selection process and conduct a lot of online research before buying from a shop or from ecommerce platforms such as Tao bao and Tmall.
- Senior : wine consumers over 45 are mostly “wine losers” . A niche of wine lovers who consume it as a social status and don’t mind spending a lot on a bottle.
Steps to enter the Chinese market:
1. Understanding the Chinese market
It is essential to be aware of the vastness of the Chinese territory and its market before planning to sell your wine in China. It is essential to understand that Guandong province accounts for 30% of the demand for imported wines in China and that 52 million wine drinkers reside in developed cities such as Shanghai, Chengdu, Beijing, Shenzhen and Guangzhou. Does this mean that there is no space in other cities? Not at all, but you have to adapt your promotion and sales strategies according to the areas you decide to penetrate.
2. Working on the brand
To succeed in such a varied market, it is necessary to leverage the solidity of one’s brand identity in order to convey to the Chinese consumer an image in line with his tastes and needs. The Chinese wine consumer has not yet developed a deep knowledge of the product; therefore, base the choice of a bottle on several elements including the reputation of the brand, which is why it is essential that your brand has a solid reputation and visibility on the market.
3. Localize content
To emerge in this hyper-competitive and evolving market it is necessary to proceed with awareness and prudence. Translate the name of your winery in an appropriate way and with characters that express positive and crucial concepts, do not leave this translation to chance. Translating all your content into Chinese communicates to the consumer that you have made an effort to get closer to the customer and their culture.
4. Identify where to sell and promote your wine
Do you know where consumers would look for your product? If the answer to this question is no, chances are you are spending money promoting your wines in the wrong place.
To date, an online brand presence is essential. In digital channels it is possible to sponsor products, review wines, share, show wines in live streaming and open flagship stores on e-commerce platforms. You can engage the customer by investing in KOLs which allow you to buy wine directly from their platform.
Unfortunately, Chinese platforms are different from Western ones (most social media such as Google, Facebook, YouTube, Twitter, Pinterest, Instagram and WhatsApp are banned, blocked or censored in China) and this requires an investment in social media other than those you’re used to.
To underline the importance of presence in e-commerce platforms, consider that in 2021 China accounted for (in quantity) more than half of the world’s e-commerce retail sales.
Success case: Changyu winery
Although wine consumption dropped in 2021 due to covid, the country’s largest winery, Changyu, had its best year thanks to a review of its sales strategy and focusing on its premium brands.
Founded in 1892, Changyu Pioneer Wine Company is the largest and oldest Chinese winery specializing in wine and brandy.
One of the driving forces behind Changyu’s growth has been its direct sales strategy. The historic company has actively leveraged new digital tools such as livestreaming and e-commerce to directly reach its young and tech-savvy consumers.
Thanks to this strategy, according to the company’s financial report, Changyu’s revenues from direct sales in 2021 recorded a remarkable growth of 53.4% compared to the previous year, for a total of 689 million RMB (approximately 100 million of Euro).
In conclusion, despite the crisis caused by the pandemic, the Chinese imported wine market has shown tenacity and perseverance, and still shows enormous potential to be exploited today. You need to understand and know the market, decide on a clear strategy, move easily on digital channels and understand that the only way to sell in China is to communicate your product in Chinese.
Talk to the Utopia team to get an evaluation of the best digital entry strategy in the Chinese market.