Damien Wilson - Getting it wrong on wine china @wbis2014

943 views

Published on

Damien Wilson, Professor at the ESC Dijon, talks us through the gap between the European perception of the Chinese wine market and the reality

Published in: Marketing
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
943
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
29
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Damien Wilson - Getting it wrong on wine china @wbis2014

  1. 1. How wrong we are on Wine China? Selling European wines in Asia
  2. 2. Inspiration China has our wine attention  It's big  Surface Area: 9,706,961  Population: 1,35 Billion (est. Worldbank 2013)  It's wealthy  Economic growth – 3X 2006  67% in poverty in 1996, 19% today (and 1% - 31%)  In concentrated areas  It's drinking wine  Increasing at CAGR of 20% (Rabobank 2013)  58,7% increase in per capita consumption 2008-2011 "Further import demand will likely be required to meet the rising consumption gap" 7 février 2014 Contexte de la présentation : convention, cours, réunion 2
  3. 3. Concentration of wealth 7 février 2014 Contexte de la présentation : convention, cours, réunion 3
  4. 4. So, everyone is madly wine supplying China China's wine stats  Consumes approximately 6,5% of world wine  Produces approximately 7,5% of the world's wine Europe is heavily leveraged in China This is what we don't want to see… February 7, 2014 - page 4
  5. 5. How wrong are we on Wine China? THE JOURNEY
  6. 6. What has happened so far… The Crisis… The False Recovery The wine boom of the 60s and 70s led to peak wine  From almost 30 billion litres (OIV 2011)  Down to 23 billion Litres by the early 90s (Demeter and OIV 2013) From the early 90s to now  Has remained more or less static in aggregate  With New market growth picking up European declines Wine has gone from being more local to more global  Wine market volume from 24 to 28 billion litres between '98 and '12.  Real value from US$274 to US$312 billion in US$2012.  That's a slight fall from US$11,42 to US$11,14 per litre. In that same period, global wine imports increased by 50% (CBA and OIV 2011) 7 février 2014 Contexte de la présentation : convention, cours, réunion 6
  7. 7. And, there are less economies of scale 7 février 2014 Contexte de la présentation : convention, cours, réunion 7
  8. 8. So…. In a static market Where the growth has come from a change from heavy to new consumers Who need a  Basic  Consistent, and  Enjoyable product And are loyal to wines that satisfy these criteria 7 février 2014 We've increased competition  In number of producers  And increased trade between markets And the costs of admin and management  Systems of region and quality control (More AOCs, DOs, shows, etc..) And further fragmented the offer through new products Contexte de la présentation : convention, cours, réunion 8
  9. 9. The problem… What they want To enjoy a glass of French red wine – a pleasure What we're giving them Instructions Rules Constraints Condescension We're offering – a bottle of small parcel, of hand-managed, historically practiced, rigorously controlled, expensively distributed, and non-adapted, unfamiliar, plot-ofland-labeled beverage of unknown quality And we're telling them they have to learn about it to enjoy it 7 février 2014 Contexte de la présentation : convention, cours, réunion 9
  10. 10. In summary, we've been messing up Europe has been going the wrong way for decades Great European wines are still great  They attract attention, but don't sell themselves Europe can't hold onto the glory days of the 60s and 70s  eg. Fr: 10% VDQPS in 60s v ~70% of wine is AOC today (ONIVINS 2007) What worked then doesn't work now Need a better balance between quality tiers and demand 7 février 2014 Contexte de la présentation : convention, cours, réunion 10
  11. 11. And China knows it So has carefully planned an entry to the wine sector Which is easier with leadership that isn't affected by distractions They're managing growth  Production  Quality/Price tiers  Perceptions With selective adaptation in their own industry 7 février 2014 In the same period as the previous slide The wine market in China has gone from  69 to 255 billion 2012RMB  1,2 to 4,3 billion Litres From 57,5 to 59,3 2012RMB/Litre They're going up… Contexte de la présentation : convention, cours, réunion 11
  12. 12. Europe is heavily leveraged in wine China A bulk of wine import volume comes from Europe  France has 47,8% of wine imports by volume  Spain and Italy making up most of the remaining European And the forecasts are for continued growth 7 février 2014 But with China now the world's fifth largest wine producer (and growing)… What's going to happen to Western Europe's golden wine market? Is this a major cause for concern? Contexte de la présentation : convention, cours, réunion 12
  13. 13. Actually, no. In fact, Europe is in pole position here Market dominance means  Market advantages  Influence perceptions  Customers for life It's all about how this situation is managed 7 février 2014 Contexte de la présentation : convention, cours, réunion 13
  14. 14. The wine sector needs to learn from its mistakes And work with China Tastes are different Packaging is different The consumption occasion is different Motivation to drink wine is different Business relationships are different 7 février 2014 Contexte de la présentation : convention, cours, réunion 14
  15. 15. Try adapting to the needs of wine China Packaging is different Consumption around meals is ill-suited Motivation is often to respect the guest's value, or celebrate an event for all Business relationships are about slowly building up trust… 7 février 2014 Contexte de la présentation : convention, cours, réunion 15
  16. 16. And then … The Chinese market will be a source of pride instead of fear Compare what China is doing to adapt  Your offer  Communications  Wine tourism  Planned production And look to those making it work there… 7 février 2014 Contexte de la présentation : convention, cours, réunion 16
  17. 17. For your enjoyment… So let's move onto a great case of wine success in China… 7 février 2014 Contexte de la présentation : convention, cours, réunion 17

×