In 2014 we joined a number of like minded Associates and formed the Navigate China Wine Intelligence Division. Each of our team have/do live in China (myself the least only 6 years), speak fluent Mandarin as a minimum and have worked in the wine trade extensively since 2004. My role helping clients like Pernod-Ricard, Penfolds, and Moet and Chandon was focused on helping developing the optimum positioning in the minds of the target consumers. Other teams members have come from extensive trade marketing backgrounds, yet others with a wealth of alcoholic drinks consumer and trade research experience. We've developed a proprietary market entry process we call Vinibrand but are happy to customise our approach to your needs. If anything the presentation may give you some new ideas about the wine market in China. Enjoy

1. Wine to China
The Next Great Gold Rush
John Gregg,
Principal
Navigate Consulting
March, 2015

2. Outline
Provide an overview of the Chinese wine market;
• The macro view of China
• Profile of the overall wine market
• An examination of the imported wine category
• A snapshot of imported wines
To provide even the Chinese ‘first timer” with a solid
baseline and understanding
from which to begin planning their entry into this
unprecedented market.

3. 50-60
40-50
30-40
10-20
20-30
0-10
Population Scale
(millions)
HUBEI
ANHUI
ZHEJIANG
JIANGSU
NINGXIA
TIBET
XINJIANG
QUINGHAI
CHONGQUING
YUNNAN
SICHUAN
GUANGXI
GUIZHOU
HUNAN JIANGXI
FUJIAN
GANSU
SHAANXI
INNER MONGOLIA
SHANXI
GUANDONG
HENAN
HEILONGJIANG
JILIN
HEBEI
SHANDONG
HONG KONG
MACAU
SHANGHAI
LIAONING
BEIJING
TIANJIN
100-110
90-100
80-90
70-80
60-70
A Population of 1.4 Billion, spread throughout
34 Provinces – 10 With Populations of 50m+

4. Beer and spirits particularly “Baiju” still dominate China’s
alcohol market………but that situation is changing rapidly
• Sales of alcoholic beverages in China totaled 123 billion litres in 2014, valued at US$176B
• This is compared to Australia’s total alcohol market value of AUS$10.4 Billion
• Beer dominates by volume with an 85% share, with spirits on 8%
• Beer’s share by value is much lower at 40%, just ahead of spirits with 38%
• Wine fastest growing – 5 year volume CAGR of 18%, compared to beer at 8%, spirits at 3%
Source: Euromonitor International
Beer
85%
Cider/Perry
0%
8%
Volume share
RTDs
0%
Other Wine
4%
Grape Wine
3%
Spirits
Value share
Grape Wine
Other Wine
10%
RTDs
0%
Spirits
38%
12%
Cider/Perry
0% Beer
40%

5. 515
2,989
2,671
2,305
2,259
2,228
971
1,162
1,015
973
535
16,237
France USA Italy Germany China UK Russia Spain Argentina Romania Total Top
10
Source: OIV; Wine Australia; Euromonitor; analysis
16,752
Per capita
consumption,
2014
China is a large wine market,
but mostly consumes its own
domestic production
China now ranks 5th and is a whisker behind 4th Germany
among the Top-10 wine consuming countries…but on a per capita
basis has plenty of room to grow
Volume of consumption 2014
Millions of litres
39.2 9.4 41.1 24.8 4.3 22.3 8.3 21.7 24.8 12.3

6. If current growth continues by 2018 there will potentially
be 648 million wine consumers
• At 1.4 billion, China has the world’s largest population
• The Chinese population expected to peak at 1.49 billion by 2030
• Wine Intelligence research shows that 179 million adults currently drink wine in China
but only 84.3 million adults drink imported wines.
• Rabobank estimates that 248 million people in China have the purchasing power to
occasionally consume imported wines

7. Shijia-
Jinan
Zhengzhou
WuxiChang
NingbozhouWuhan
Dongguan
000’ RMB
per capita
Tier 1 cities Tier 2a cities
4 highest GDP High GDP with big market
Tier 2b cities
Relative small market with high GDP per
capitaRMB bln
Tier 2c cities
High population
with relatively low
GDP per capita
Chengdu
ShenzhenZhongshan
Zhuhai
Tier 2a cities
Tier 2b cities
Tier 2c cities
Cities covered
Harbin
Changchun
Shenyang
Hohhot
Beijing Tangshan
Baotou Dalian
Tianjin
zhuang Yantai
Zibo Qingdao
Xi’an
Suzhou
Nanjing Nantong
Zhen Shanghai
jiang
Chongqing
Hangzhou
Wenzhou
Changsha Fuzhou
Quanzhou
Xiamen
Guangzhou
Tier 1 citiesFoshan
China: one country, but many markets
The coastal cities in China represent the majority of the economy
China’s top 20 cities ranked by GDP
Source: China Year Book, Respective cities’ year book 2014
Breakdown of GDP by cities tier system
Source: China Year Book, Respective cities year book 2014

8. The Macro View
China Wine Market Profile
Imported Wine Category
How We Can Help You

9. Distribution:
China is relatively evenly split by sales channel
• Wine volume share in 2014: off‐trade 49%, on‐trade 51%
• Growth rates in both channels similar, therefore
• Very little change in off‐trade and on‐trade shares over the last decade
• Domestic mainly off‐trade, imported sector pre‐dominantly through the on‐trade
• Expansion of leading retailers will expand the off‐trade supermarkets (62% share) and smaller
specialised wine stores (18%) are gaining market share

10. Reds dominate …for now…, but watch for the coming
White and sparkling surge
• Red wine accounts for just under three‐quarters of China’s wine market. Whites .>1/4
• Red sales growing at a faster rate (5 year CAGR of 21%) than whites (5 year CAGR of 14%)
• Rosé and sparkling small but growing segments
• The preference for reds relates to its image of vintage, sophistication, heritage, investment value
plus the colour red symbolises fortune and joy in China
However many females, especially when out with friends have started to
switch to whites and sparkling varieties, which will boost white share of
the total market rapidly

11. Two holidays account for 60% of wine sales
• Chinese New Year and Autumn Festival account for 60% of wine sales
• Primarily due to family and business gatherings during these festivals
• Gift boxes are popular, while off‐trade sales are mainly for gift giving and family visiting

12. • Traditional
packaging/labeling,
communicates a “premium”
image associated with
“heritage”
• Cork is “necessary”
(synthetic is also acceptable,
but ideally real cork,
especially for premium
positioning) versus screw-
cap
Creating Premium Perceptions
The importance of packaging
With limited consumer knowledge, packaging becomes an important proxy for wine quality
Distributor
Retailer
Restaurant hotel
7
10
10
9
8
9
7
9
9
6
7
9
7
4
3
4
4
5
7
1
5
Preference of packaging from different stakeholders
(High marks indicate favorable packaging style)
Source: Rabobank, 2014
Scale 1-10
with 10
being most
preferred

13. Don’t underestimate the scale and affinity for the
domestic industry
• Domestic wine production reached nearly 211 million cases in 2014
• Production bases are concentrated in the North, with Shandong the major region
• The major 3 domestic players are Changyu, Dynasty and Great Wall.
• Each own domestic vineyards as well as source from growers and imports of bulk wine.

14. The Macro View
China Wine Market Profile
Imported Wine
How we can help you

15. Import sector is growing fast; France and Australia lead
• France (45%) is the leading importer followed by Australia (20%).
• Top six importers account for over 90% of imported volumes sold
2014

16. Growth in imports is outpacing domestic
• Sales of bottled imported wine are growing at nearly four times the rate of domestic
embracing of Western culture, products and lifestyles,
increasing disposable incomes,
healthy image of wine compared to other alcoholic beverages in China,
and the high quality perception of imported wines
Also cultural factors such as “Guanxi” face in a business context
Why?

17. Cumulativeratiofor
Australianwinesales(%)
• Strong presence about 20% of all imports in at the “high-end” retail pricing point in China, between RMB
200-300 per 750 mL bottle
• RMB 300-400, Australia has a dominant position, selling 40% more than French wine
• BUT THERE IS A CEILING - For the “icon” price segment (>RMB 400), Australian wines top out between
RMB 500-800, while French dominate all price points from RMB 1,000 to
10,000
Retail price point (RMB per 750 mL bottle)
100
75
50
25
Size of bubble indicative of market size at respective price points
% indicated market share by volume of AUS wine in respective price points
= 300,000 9L cases
Below 30 30-50 50-100 100-150 150-200 200-300 300-400 Over 400
PremiumHigh-end IconMid-rangeEntry-levelLow-end
7%
2013 Import bottled wine volume (9L cases)
Total China: 15.1 million
Total from Australia: 4 million (20.5%)
15%
11%
Australian wine has gained momentum in the “high-end”
and “premium” segments
The penetration of Australian wine among China’s wine pricing points
Imported wine sales volume from all origins in China at defined retail pricing points
Source: AUSTRADE, Morgan Stanley,IWSR, UN Comtrade, 2013

18. Growth of leisure
Class in China
•
•
•
•
Consumption boom.
Life-style changes.
Food and beverages as mainstream
Self-medication.
• Local and imported.
• Multinationals in China.
• Traditional influences.
• Own consumption
• Gift giving.
• Restaurants/bars
• Supermarkets.
• On-trade growth
• Wine specialists
• E-commerce
1
Urbanization
3
Diversity Of
Choice
2
Evolution Of
F&B
Culture
4
Modernization
Of Channels
... The same drivers transforming China’s F&B
sector are driving wine consumption

19. Savvy wine exporters are capitalising on the rapid spread of F&B
culture into secondary and tertiary cities
China’s Urban Landscape

20. The Macro View
China Wine Market Profile
Imported Wine
How we can help you

21. WHO ARE WE?: Navigate is a “Boutique” international management consultancy
Our team, all ex Tier 1 employees from market research or management consulting; either live
or have lived extensively in China, speak at least Mandarin fluently and have extensive
experience assisting Australian, US and UK winemakers successfully capitalize on Chinese
market opportunities
Our work in China builds on our proven model of bringing together
research experts with wine market specialists to deliver actionable
insights
Clients – Australia &
New Zealand
Clients – United States

22. Little Differentiation:
Many small players failing
to invest in R&D has led
to overcrowded markets
and undetected
opportunities.
False Advertising
Claims: Even though the
government has cracked
down, the damage caused
by years of false claims
remains.
Poor Product
Quality: Due to the
short term view of
manufacturers cheap
raw materials and old
equipment are used.
Fake/Copied
Products: Widespread
problem, some of
Australia’s most prestigious
labels are openly copied
And sold in legitimate trade
channels
• In the 1990s, as the
wine market began
to develop, many local
manufacturers entered.
• Unscrupulous practices
depressed the sector, only
relieved when regulation
was introduced in the
early 2000’s.
• While progress has be
made, infractions of
course remain.
Ongoing
Unscrupulous Local
Practices
Historical Development Ironically Creating A
“Vacuum” of trust that
only imported brands can fill
• Public distrust means
70% of consumers are
distrustful of wine retailers
product offerings
• Many believe that
international products are
of higher quality than
domestic products.
We help clients understand & avoid the risks inherent
in the Chinese market

23. Effective brand names
HOW WE CAN HELP YOU: We provide evidence-
based solutions for a wide range of business questions
Back label design
and content
Pre and post-testing
of advertising
… and more
Financial and business planning
Consumer and trade
preferencesPrice positioning
Evidence-based solutions
Market entry strategies and
Geographic focus
Distribution
Understanding
motivations

24. What should my Chinese market entry strategy look like?
How do I grow top line revenue and bottom line profit.
How do we establish a successful positioning for wines
from XXXX in the Chinese market?
Does the Chinese translation of my brand name reflect
the positioning we want?
How to Chinese consumers evaluate and interpret my
label design?
What are the opportunities and barriers from the trade
perspective for my range?
What should my label look like for the Chinese market?
Strategic
Advice
Brand
development
Primary &
Secondary
research
Go to Market
Services –
distribution,
retailing and legal
Service areas Questions we answer include:
WHAT WE DO: A broad range of services tailored to
individual client needs
For each project, we assemble a project team with the right mix of research, management consulting
and market expertise to give you an evidence-based answer to your business questions

25. STRATEGIC ADVICE: Using evidence-based approach to
support key strategic decisions
Primary &
secondary
research
Brand
development
Strategic
advice
Reports
When helping clients to tackle complex strategic questions, we
use a structured approach in order to deliver a strategy that is
evidence-based and achieves our client’s objectives
Questions include:
“What should my distributor strategy be for China?”
“How should I build my brand portfolio for China?”
A typical process will address the following areas:
Where are
we now?
1
What do
we want to
achieve?
2
How do we
get there?
3
Does our
proposed
approach
work for
consumers
and trade?
4
How do we
get to
market?
5

26. We work with clients to
capitalize on top line growth
opportunities while also
addressing long-term profit
protection.
Development
Assessment of the opportunity and
formulation of the strategy to enter new
channels, value segments, application
sectors and lower tier cities.
Penetration
Listening to the voice of the customer to
improve customer segmentation &
targeting, product & service offering, and
route-to-market.
Profit Protection
Understanding of the cost curve and cost
structure 5 years out, and development
of the right response to protect profit
margins.
Government Affairs
Design of a modern, proactive and
customized approach to government
affairs and corporate social responsibility
to meet business objectives.
Primary &
secondary
research
Brand
development
Strategic
advice
Reports
STRATEGIC ADVICE: We help secure top-line growth and
secure bottom line profit

27. Distribution
Distribution
Branded
Partnership
Strategic
Investor
Greenfield Acquisition
Importer/distributor
model, supported by
in-country team (RO
or FICE).
• Detailed
understanding of the
market opportunity.
• Modeling of organic
growth scenarios,
route-to-market
structures, and
nature of in-country
support needed.
• Search and selection
of distribution
partners.
Importer/partner
model, leveraging
existing sales and
distribution platform,
either F&B or pharma.
• Potential partner
assessment (interest
in proposition and
readiness to share
downstream
margins).
• Sustainability
assessment (risks,
next best use of
assets, alternative
supply).
A step further than
branded partnership,
offering to divest a
minority share.
• Assessment of the
strategic significance
of the Chinese
market, and thus the
rationale for a
strategic investor
from China.
• Identification of
synergies with a
strategic investor,
supporting their
globalization.
Investment in in-country
production capacity and
full business capabilities,
either as a WFOE or JV.
• Full modeling of the
economics and
detailed business
planning.
• Decision on
whether a JV
partner would be
necessary, or
preferable and
feasible to go
alone.
Acquisition of
existing business in
China.
• Definition of the
ideal target profile
that fulfils the entry
strategy.
• Search and selection
of attractive and
available targets.
• Design of acquisition
strategy and
relationship building
with vendor.
1 2 3 4 5
Entry Models
STRATEGIC ADVICE: Our goal is to help you find and grasp
the optimum market entry model for your brand
Primary &
secondary
research
Brand
development
Strategic
advice
Reports
Including the pros and cons of the myriad of legal
Partnership models in China is you wish to link with a
A well established player

28. PRIMARY & SECONDARY RESEARCH: The right method at the right
point in developing your Chinese market position, brand platform and
distribution network
Primary &
secondary
research
Brand
development
Strategic
advice
Go to
mkt plans
Quantitative
Bespoke quantitative
surveys of Middle-upper
middle class wine
Drinkers in China.
Covering up to 35 cities
and representative of 250
million consumers
Qualitative:
Consumer
Focus groups
In-depth interviews
Tremor panel (phone and
online)
Sensory testing
Packaging and ad analysis
Trade Research
A key focus for our China
work is interviewing
members of the Chinese
wine trade, including:
Importers and distributors
Major off-trade buyers
High-end on-trade
Journalists and educators
Recruitment begins with our
own network of contacts in
China. For specific
recruitment needs, we use a
network of locally-based
partners to find the right
respondents
Secondary research
Our in-house language
capabilities and research
experience allows us to
quickly and effectively
conduct secondary research
on the Chinese wine space.
Platforms that we consult
include:
Social media, including
Weibo, Renren, forums
etc.
Press and media
publications
Data sources, including
Chinese Bureau of
Statistics
As a management consultancy whose team have experience across globe but more
importantly in the Asia-Pacific region our strategy, research and implementation
expertise allows us to draw on wide range of research methodologies.

29. BRAND DEVELOPMENT: Our proprietary Vinibrand®
approach to optimize brands for the Chinese market
Primary &
secondary
research
Brand
development
Strategic
advice
Reports
Brand development Pre-launch Post-launch
Brand strategy
Differentiated brand
positioning / brand audit
Brand specification
Optimised Chinese
brand name
Culturally appealing
label
Culturally relevant back
label
Brand communication
Effective
communications
campaign
Vinibrand® provides a framework for assessing and developing a
brand for the Chinese market, with particular attention placed on
the unique demands of this market.
Based on individual client needs, we typically select one or two aspects of the
brand development process to focus on.

30. CASE STUDY:
Vinibrand® market entry and positioning project
BUSINESS CHALLENGE
A consortium of Western Australian wines brands, led by
the Industry group Wines of Western Australia wanted
To explore the feasibility of entry into the Chinese
wine market.
In particular they group wanted to avoid the increasingly
cluttered array of Eastern Australian wines on offer in
the three Tier 1 Chinese cities of Beijing, Shanghai and
Guangzhou and carve out a less crowded and
competitive niche in other regions.
We were asked to develop and execute a complete
market entry plan for the wine consortium.
SOLUTION
Stage 1:
A three phase review of the Chinese market was
undertaken in order to select the optimum new venture
legal and organizational structure, geographic footprint,
distribution strategy and retail channel selection and
launch trade and consumer marketing campaign for the
consortium of WA wines. 21 Chinese provinces in China
were examined in depth from which a selection of 14
provincial cities ere chosen for first stage distribution. A
limited joint venture structure was chosen as the
optimum structure.
Stage 2:
Trade research to determine distribution options and
geographic reach. Then Primary consumer research to
determine the optimum product portfolio, pricing
strategy, point of sale communications and digital and
traditional media support.
Stage 3: Full market entry plan and implementation
including years 1-3 financial and operations plan

31. Our team includes:
• Chinese based nationals, including
native Mandarin and Cantonese
speakers
• With experience working across all
provinces and regions
• Quantitative and qualitative market
research expertise
• Experienced trade researchers
• Extensive experience in the wine
industry, including WSET
qualifications
Our team is formed of some of the brightest
and most experienced wine industry,
marketing, research and branding experts in
the business.
RUI SU
Research Director
The Navigate CHINA Wine Team
Market experts with research and consulting expertise
John Gregg
Navigate Principal
Kim Wu
Director – Trade,
Francis Ly
Director – Logistics
& Partnerships

32. Call + 61 402 493 278
to speak to John Gregg
and discuss establishing your foothold
in a never to be repeated wine marketing opportunity
www.navigateconsulting.com.au