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Wine industry still bullish on China

By Mike Peters in Santa Rosa, California | China Daily | Updated: 2017-01-03 07:54

Cautious enthusiasm for the Chinese wine market. More men in supermarkets. Opening a bottle of wine with your shoe.

Those were some of the takeaways at Wine Vision, an annual forum for the industry hosted last month by Sonoma County in California.

Edouard Duval, CEO of Shanghai importer East Meets West, told the global group of wine professionals that while there's less "ganbei!" in China these days thanks to a government crackdown on extravagance and gift-giving, the number of Chinese who drink wine at least weekly is up 35 percent.

"These are people who drink to enjoy, not to impress," he says.

Noting that average per capita consumption in the Chinese mainland is 1.2 liters annually, compared to 6 in Hong Kong and 10 in the United States, Duval says the potential of the Chinese market remains strong.

The drivers include continuing economic growth, an expanding middle class and explosive growth in travel, he says. "Travelers are people with purchasing power - they visit wineries, experience wine culture and bring it home with them."

About the surge in online purchasing in China, Duval says it has lowered the sale price of wines but has boosted the number of imported wines available in China, a net plus.

Marc Soccio of California-based Rabobank notes that while the market has gone up, down and now up again, the slowdown in wine sales since 2012 has affected Chinese producers most: Imports - particularly from Australia, Spain and Chile, are up. While Chinese wineries have made some great strides in quality, he predicts it will take 10 years for them to significantly affect import sales.

Several speakers critiqued the notion that millennials are reshaping the wine market. Rob McMillan of Silicon Valley Bank notes that while today's young people may shift from beer to wine more quickly than their parents, they have limited spending power and globally reach their peak earning potential later in life thanks to the 2008 recession.

Noting what he calls "an irresistible rise in premium brands", McMillan says the 35-55 demographic continues to be the driver of the most profitable segments of the industry.

A guy thing

Most purchases of wine in the world are made by women, several panelists noted, and that's hardly news: Most people in any supermarket are women.

"Sixty-five percent of our customers are women," says Terry Creaturo, adult beverage coordinator for the US grocery giant Kroger. "But that's actually down from 70 percent - now more men are shopping."

Stephanie Gallo says her family-owned winery saw an opportunity in that demographic shift.

Gallo is well-aware that branding and labels drive many purchases - a Kroger study shows that 50 percent of wine buyers didn't have wine on their shopping list when they arrived at the store. As vice-president of marketing, Gallo has spearheaded campaigns that have made Barefoot the largest bottled wine brand in the world; other successful brand launches include Naked Grape, Vin Vault and Dark Horse.

So how do you attract male eyeballs in the store?

Gallo created the brand Carnivor.

"It's aimed at what we call the fast-brain response," says Gallo. The bottle of "bold, intense" cabernet sauvignon is black; the label has a crest with a spear-toting lion. "It says, 'I'm a steaky guy', Gallo says of the brand's appeal. "It's an appeal to male pride."

High-tech, low-tech

High-tech was another highlight of the conference.

Citing a 2014 report that 20 percent of the wine consumed worldwide is counterfeit and "an alarming 50 to 70 percent of 'imported' wine sold in China is fake", the makers of Thinfilm showcased the company's scannable tags. With unique IDs the makers say are virtually impossible to clone, the smartphone-activated technology not only prevents fraud but provides consumers with traceability information and other data about the contents of a bottle directly from the maker.

And what about opening a wine bottle with your shoe?

That's the point of one widely clicked video on YouTube, which Linda Petrie of that online platform touts as an example of the need for good story-telling in a marketing video.

"Good stories are good for business," she says.

When 400 hours of video are uploaded to YouTube every minute, she adds, you have a short window to grab attention.

"There are 11 million wine-related videos out there," she adds.

 Wine industry still bullish on China

Wine Vision offers global wine pros a taste of Sonoma County vintages like this one (left) from Francis Ford Coppola's winery.Mike Peters / China Daily

 

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