Chinese Wine Consumers
Wednesday, December 23, 2015 in News
Hong Kong International Wine and Spirits Fair saw representatives from all areas of the trade gather for three days of exhibitions, networking and seminars. With Hong Kong and China now making up the third largest market for Australian wine exporters, it is an important event, and presents a gateway to producers who are of a mind to trade in China.
Of course, in the last five years, the possibility of ‘doing business in China’ has become a kind of holy grail, an opportunity that seems to have limitless possibilities. Its massive population, combined with a loosening of governmental constraints has created a burgeoning middle class that is growing at an exponential rate, and has money to spend. In conjunction with an increased interest in western culture, and the desire to explore its idiosyncrasies, particularly those that have an element of luxury to them, the moment for wine producers seems propitious.
It was with this in mind that many people attended one of the Fair’s more interesting presentations that analysed Chinese consumer behaviour, by Dr Justin Cohen of the Ehrenberg-Bass Institute at the University of South Australia. The Erhenberg Bass Institute is a world renowned market research centre, and Dr Cohen specializes in international brand marketing and consumer buying behaviour. Wine branding is one of his areas of particular expertise, and his address was a cogent look at the difficulties of making inroads into the Chinese market place.
His key message to producers and vendors hoping to access China is to make their brand distinctive, and easily recognizable. Different labels for different varieties, for instance, is counterproductive. As many Chinese consumers will have little to no English, the visual cues they work off are extremely important in their decision making process, which is not necessarily a rational one. There may be some consumer information in Mandarin on the back of the bottle, but this is not what leads the customer there in the first place. In their busy lives, consumers want their options to be easily identifiable, so they can get in and get out quickly.
Dr Cohen identifies two types of consumers who buy wine; those with a low involvement with the product and those with a high involvement. Anyone reading this article would qualify as someone with a high involvement. Low involvement consumers are in the vast majority, and account for up to 50% of wines sold, the corollary of which is that highly involved consumers buy much more wine. The object of wine marketing is to turn low involvement consumers into high involvement consumers, and the economic benefits are obvious, particularly with a population the size of China’s.
As part of his research, Dr Cohen has undertaken a survey of Chinese wine consumers in an attempt to glean some predictable trends in their buying patterns. His sample group was mostly of upper middle class consumers, across six cities, (44% from Shanghai) aged between 18 and 50 years old who drank imported wine at least twice a year. The central aim is to identify what motivates Chinese to drink wine, and the results turn up some unexpected revelations. For instance, by far the most significant reason Chinese consumers drink grape-based wine is because they believe it to be good for their health, the second because it is good for relaxation. Enjoying the taste ranks fourth, after the belief wine creates a convivial atmosphere.
The point is that low involvement consumers tend to make ‘safe’ decisions when it comes to purchasing wine: they generally buy something they know. This is where branding becomes so important, because it is critical for the brand to find its way into the mind of the consumer at the first instance. The survey indicated that only three brands had widespread resonance in China; Lafite, Penfolds and Great Wall, a Chinese wine brand. (Interestingly, Bordeaux registers in the Chinese consumer consciousness in the same way as brands do.)
A cross section of the results of the survey’s most popular categories; country, variety, region and price point, indicates that the bottle of wine most likely to sell will be a French Cabernet from Bordeaux that costs about 250 RMB, around $40. And in fact, France dominates consumer consciousness by quite some considerable margin, meaning Australian exporters may have their work cut out for them.
Another set of criteria aimed at understanding Chinese perceptions of wine involved asking survey subjects whether they saw the wine of certain countries as being either a ‘fine’ product or a ‘commercial’ product. For instance, Chinese wine is clearly seen as a ‘commercial’ product in China, not generally thought of as having the sophistication of imported wine, whereas wine from France and Italy is overwhelmingly perceived as being a ‘fine’ product. Australian wines however have no single distinguishing characteristic in this regard, being seen as both commercial and fine in roughly equal parts. This is potentially quite a troubling situation for Australian wine marketers, as it is obviously preferable to be perceived as a 'fine' luxury item, aligned with the wines of France and Italy. Identifying this problem is a significant step forward nevertheless.
For Dr Cohen and his team, this research is an ongoing project that will continue to yield increasingly discrete results. Another arm of the project, for example, involves creating a Chinese tasting lexicon, which will be quite a progressive step as it invites consumers to become more intimately and subtly engaged with the product. The key to captivating new wine drinkers is essentially about education. Finding out what Chinese consumers want, and generating a vocabulary with which they can express themselves is a good start.