10 Trends for the Chinese Wine Market in 2013.

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We outline 10 trends we believe will shape the Chinese wine industry over the next 12 months.

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10 Trends for the Chinese Wine Market in 2013.

  1. 1. 10  Trends  for  the  Chinese   Wine  Industry  in  2013  10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  2. 2. China Wine Introduction Solutions Now  officially  in  the  Chinese  New  Year,  we  take  5me  to  recap  our  predic5ons  for   the  Chinese  Wine  Industry  in  2013.       In  the  following  presenta;on  we  briefly  outline  10  trends  we  believe  will  shape  the   Chinese  wine  industry  over  the  next  12  months.       To  con;nue  the  discussion  join  us  on  TwiDer  (ChinaWineViews)  and  LinkedIn     (China  Wine  Insight).    10 Trends in the Chinese Wine Market for 2013   www.chinawinesolutions.com
  3. 3. China Wine Solutions 1. Market Consolidation The  current  number  of  wine  sellers  in  the  Chinese  market  is  unsustainable.  2013  will  see  see  hard   trading  5mes  for  most  and  many  will  exit  the  industry  en5rely.       According  to  Radobank,  there  were  3,863  wine  importers  in  2011  (and  that  doesn’t  account  for  the  100’s  of  unofficial   ones),  up  73%  from  2010  and  up  200%  in  5  years.  Even  in  a  market  the  size  of  China,  this  number  is  unsustainable.       Just  in  the  last  few  weeks,  Dynasty,  one  of  China’s  largest  domes;c  wine  companies,  posted  a  profit  warning  amongst   difficult  trading  condi;ons.  The  take  away  from  writer  Doug  Young  of  the  South  China  Morning  Post  was  ‘A  new  profit   warning  from  Dynasty  reflects  a  burs;ng  bubble  in  China’s  overheated  wine  industry,  with  a  major  consolida;on  likely   to  start  in  the  second  half  of  this  year’.      10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  4. 4. China Wine Solutions 2. Changing Expectations China  will  no  longer  be  seen  as  a  quick  win  market.       As  compe;;on  becomes  increasingly  fierce,  the  ;me  for  easy  sales  and  high  margins  is  rapidly  becoming   a  thing  of  the  past.    In  recent  years,  China  has  been  seen  by  many  as  the  answer  to  falling  margins  in   more  mature  markets.     However,  biDer  experience  is  teaching  many  wineries  that  doing  business  here  involves  a  significant   learning  curve,  high  costs  and  o_en  lower  than  expected  volumes.    10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  5. 5. China Wine 3. Increased Commitments Solutions As  expecta5ons  change  and  compe55on  increases,  wineries  will  move  to  take  a  more  ac5ve  approach   in  the  market.       ADemp;ng  to  beDer  understand  market  trends,  establishing  a  local  presence  and  increasing  ways  in   which  they  can  engage  and  influence  key  stakeholders  are  already  becoming  increasingly  common.     As  part  of  this,  2013  will  see  more  foreign  wineries  move  to  create  a  presence  on  Chinese  social  media.   Companies  across  various  industries  are  finding  social  media  to  be  an  effec;ve  channel  to  find  and   engage  their  target  audience;  the  wine  industry  is  no  excep;on.  10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  6. 6. China Wine Solutions 4. Online Coming of Age Online  wine  retailors  will  con5nue  to  increase  their  influence  as  a  major  sales  channel.       According  to  Wine  Intelligence,  the  two  major  online  wine  retailors  are  currently  Yesmywine.com  and   Tmall.  They  point  to  two  reasons  behind  the  growth  of  online  sales;  improving  technology  and  the  ability   for  trusted  online  retailors  to  reduce  concerns  about  fake  wines.       We’d  add  a  third;  the  closeness  of  the  online  world  to  consumers.  The  future  wine  market  in  China  rests   with  the  younger  popula;on,  a  popula;on  whose  day-­‐to-­‐day  life  is  seamlessly  integrated  into  the  online   world.  For  these  consumers,  buying  online  not  only  allows  for  quick  price  comparison,  access  to   informa;on  and  user  generated  reviews  but  represents  a  natural  and  convenient  solu;on  that  fits  with   their  busy  lifestyles.  10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  7. 7. China Wine 5. A More Sophisticated Consumer Solutions 2013  will  see  con5nued  diversifica5on  in  the  tastes  of  consumers  in  core  markets  such  as  Beijing,   Shanghai  and  Guangzhou.     Last  summer  saw  a  surge  in  sales  of  white  and  sparkling  wines  fueled  mainly  by  the  increasingly   important  female  segment.  2013  will  see  this  trend  con;nue  as  well  as  increasing  aDen;on  paid  to   bou;que  wines  from  non-­‐mainstream  regions.  The  Chinese  wine  lover,  especially  those  aged  under  35,   love  to  experiment  with  wines  and  are  increasingly  looking  to  less  mainstream  op;ons.    10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  8. 8. China Wine 6. Tier 2 & 3 Cities Solutions Following  the  trend  in  Tier  1  ci5es,  the  wine  market  in  China’s  5er  2  ci5es  will  begin  to  evolve.     Whilst  the  situa;on  in  regional  ci;es  is  currently  in  a  chao;c  state,  2013  will  see  the  first  signs  of  an   increasingly  professional  industry  emerge.  Before  that  happens  however,  many  sellers  in  these  ci;es  will   go  bust  before  a  more  professional  trade  appears.     On  the  consumer  front,  more  inhabitants  in  Tier  2  ci;es  will  start  to  move  towards  consuming  wine   opposed  to  just  gi_ing  it.  Wine  Intelligence  says  there  are  currently  around  20  million  consumers  of   imported  wine  in  China  –  just  1.5%  of  the  popula;on.  They  believe  this  will  increase  to  around  80  million   by  2020,  with  consumers  from  Tier  2  ci;es  making  up  the  bulk.  10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  9. 9. China Wine Trends Continued Solutions 7.  Trading  Down   8.  Miniaturiza5on     Streamlining  of  distribu;on  models,  increasing   As  wine  moves  to  become  enjoyed  on  a  more   wine  knowledge,  a  changing  demographic  and   regular  basis,  single  serving  boDles  will   a  more  transparent  pricing  environment  will   become  increasingly  popular.  This  will  be   lead  to  an  increasing  willingness  for   especially  true  in  the  city-­‐based  convenience   consumers  to  trade  down.   store  format.        10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  10. 10. China Wine Trends Continued Solutions 9.  A  Focus  on  Fake   10.  Chinese  Wine  to  Go  Global   The  Chinese  government  has  iden;fied  solving   the  issue  of  fake  wine  as  a  priority  for  the   While  the  focus  of  the  Chinese  wine  industry   industry.  2013  will  see  increased  pressure   is  firmly  on  imported  wines  into  China,  2013   from  government,  industry  and  consumers  to   will  see  more  Chinese  wineries  seek  lis;ngs  in   work  together  to  improve  this  problem.   overseas  markets,  form  strategic  joint   Furthermore,  wineries  that  make  an  ac;ve   ventures  and  purchase  foreign  wineries..     effort  to  employ  ac;ve  an;-­‐counterfeit   measures  will  benefit  from  posi;ve  consumer   sen;ment.    10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com
  11. 11. Contact  Us   Contact  us  to  discuss  more  about  any  of  the  points  raised  in  this  presenta;on  or  to  inquire   about  how  our  flexible  and  cost  effec;ve  solu;ons  to  help  wine  business  succeed  in  the   Chinese  market.     Contact  Details     Winterless  Center  B-­‐1201,  1  West   Dawang  Rd,  Chaoyang  District,  Beijing,   China,  100026.     E:  nick@chinawinesolu;ons.com   M:  +86  18210211487   W:  www.chinawinesolu;ons.com     gli    10 Trends in the Chinese Wine Market for 2013 www.chinawinesolutions.com

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