Tomorrow we'll talk on emerging markets for the wine industry. I happen to find a rather interesting article by one of my colleagues, Uché Okwonko, author of Luxury Fashion Branding on luxury and emerging markets.
On her website, Uché created an online magazine on luxury. Her latest article, "Separating the Facts from the Fiction of the Emerging Luxury Markets", is related to emerging markets and I do think that a lot of her ideas are quite pertinent for the wine market:
"Before looking at the main features of each of the emerging markets, it is important to note that the emerging markets have unique characteristics that make it unrealistic for them to act as benchmarks for one another. For example, the socio-cultural attributes of China and Russia are so starkly different that it would be impossible to use the same parameters in their measurement. One thing the emerging markets have in common however is their current robust economies and the future promises this holds for luxury companies."
After she presented the main differences between the four emerging markets (Brazil, Russia, India and China), she concludes:
"The emerging luxury markets collectively hold promising futures for the luxury business but entry and successful business in each of these markets remains challenging as it ought to be approached through a sound set of strategies developed following an evaluation of the market’s specificities."
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, April 28, 2008
Thursday, April 3, 2008
Clarendelle in China
It seems to be my "brand" week. I read carefully the thread started by Hoke Harden on Open Wine Consortium on the subject and all the comments he inspired. Too many brands? Of course, in the US only, there are over 7,000 wine brands on the market. Overwhelmed? Of course, I'm overwhelmed: I usually buy my wine after consulting my friends or my wine retailers. I never buy wine in a supermarket because I can't get any advice. Need to educate the consumer? Of course, but it's an impossible task. The debate is still open and I'll add to the confusion with a little post on one of my favorite brands, Clarendelle.
Clarendelle is the brand created by Robert of Luxembourg, the VP of Château Haut-Brion in Bordeaux and one of the owners. Clarendelle wants to be the answer of the Old World to the New World wines. A good thread for the group on the European Community in Open Wine Consortium! What does it mean? Haut-Brion is one of the oldest wine estate in Bordeaux, the smallest and the oldest of the First Classified Growths (along with Margaux, Laffite, Latour and Mouton). It has a tradition of excellence. Robert launched Clarendelle as an expression of the best of Bordeaux but easily drinkable and at a very fair price. The wine is available in red, white and pink and tastes wonderful.
Classical but contemporary, Clarendelle is considered a super premium wine. As such it is very much in demand in China where the tastes are evolving. As Shanghai is leading Chinese tastes in wine":
"The wine scene here is abuzz with excitement and possibility. The number of premium-wine importers has jumped from three in 1999 to more than a hundred today. Two years ago, there was nary a shop offering tastings; now a dozen retailers hold such events. New wine bars abound. As of 2006, there was a Shanghai chapter of the highbrow Commanderie de Bordeaux, and the mostly trade-and-expat Shanghai Wine Society was founded in 2005."
Because of this continued interest in wine among the most fortunate Shanghai inhabitants and expatriates, new comers on the professional wine scene invent new events, new venues and create new excitement. The former chief sommelier of Jean Georges Shanghai, Yvonne Chiong, is working on a wine-buying program for Wang Hui Ming, a restaurant group with more than 20 establishments in Shanghai. Chiong is now pairing local cuisine with premium, imported wines—roasted pigeon, say, with a 2003 Clarendelle! Q.E.D.!
Clarendelle is the brand created by Robert of Luxembourg, the VP of Château Haut-Brion in Bordeaux and one of the owners. Clarendelle wants to be the answer of the Old World to the New World wines. A good thread for the group on the European Community in Open Wine Consortium! What does it mean? Haut-Brion is one of the oldest wine estate in Bordeaux, the smallest and the oldest of the First Classified Growths (along with Margaux, Laffite, Latour and Mouton). It has a tradition of excellence. Robert launched Clarendelle as an expression of the best of Bordeaux but easily drinkable and at a very fair price. The wine is available in red, white and pink and tastes wonderful.
Classical but contemporary, Clarendelle is considered a super premium wine. As such it is very much in demand in China where the tastes are evolving. As Shanghai is leading Chinese tastes in wine":
"The wine scene here is abuzz with excitement and possibility. The number of premium-wine importers has jumped from three in 1999 to more than a hundred today. Two years ago, there was nary a shop offering tastings; now a dozen retailers hold such events. New wine bars abound. As of 2006, there was a Shanghai chapter of the highbrow Commanderie de Bordeaux, and the mostly trade-and-expat Shanghai Wine Society was founded in 2005."
Because of this continued interest in wine among the most fortunate Shanghai inhabitants and expatriates, new comers on the professional wine scene invent new events, new venues and create new excitement. The former chief sommelier of Jean Georges Shanghai, Yvonne Chiong, is working on a wine-buying program for Wang Hui Ming, a restaurant group with more than 20 establishments in Shanghai. Chiong is now pairing local cuisine with premium, imported wines—roasted pigeon, say, with a 2003 Clarendelle! Q.E.D.!
Wednesday, March 19, 2008
Chinese wine consumers on the rise
News from various sources confirms the rise of consumption and production of wine in China. I wrote several pages on the new Chinese consumer in Wine Brands but the phenomenon seems to be increasing. Here is the update on the subject, from the newsletter of Meininger's Wine Business International:
"Chinese wine consumption is predicted to increase by 70% by 2011, with China being the eighth biggest consumer of wine in the world by 2012, surpassing Russia. According to the China Wines Information Site, the Chinese wine industry developed at a rapid clip through 2006, with production up 14.1% to 495.1 thousand kilolitres in volume over the previous year. Sales were also up by slightly more than 25%, to total 12.952b yuan ($1.8b/€1.18b). In the first three months of 2007, profits were up 33% over the same period the year before, with the China Wines Information Site (wines-info.com) predicting that output and consumption of Chinese wine will remain high."
"Chinese wine consumption is predicted to increase by 70% by 2011, with China being the eighth biggest consumer of wine in the world by 2012, surpassing Russia. According to the China Wines Information Site, the Chinese wine industry developed at a rapid clip through 2006, with production up 14.1% to 495.1 thousand kilolitres in volume over the previous year. Sales were also up by slightly more than 25%, to total 12.952b yuan ($1.8b/€1.18b). In the first three months of 2007, profits were up 33% over the same period the year before, with the China Wines Information Site (wines-info.com) predicting that output and consumption of Chinese wine will remain high."
Thursday, March 6, 2008
Generation Y and Branding
Also called "Millennials" or "Generation Why", this group is widely represented in a lot of countries and constitutes a major target for local and global brands. In the US, there are 70 million people under 30; in Vietnam, they represent 50% of the 90 million people; in China, they are 200 million strong and there are 367 million people under the age of 18, a huge potential market for this growing economy. In South Africa, they account for 35% of the population.
In countries where their number is not as significant, they are different from the Baby Boomers: in East European countries, the Millennials are the first post-communist generation and in Southern Europe, the first post-dictatorship generation. In emerging countries (South Korea, Russia), they are the first generation growing in a stabilized social environment.
The generation Y was born with Internet and finds it easy to interact with each other and then with the world. Forums, blogs, Facebook, iTunes and many other community sites are their favorite places to express themselves, share their ideas, tastes and distastes. Those young people think they can make life fit their specific needs and wants. Brands have to get used to engage in a two-way conversation with those potential consumers. Their favorite US brands, Trader Joe's, Ben and Jerry's and Whole Foods (to take into account only the brands connected to the wine and food business) communicate to their customers in a very personal and socially aware style. It's not so much what they communicate that how they do: Millennials like style, a real voice, and a bit of attitude. They love to blend personal and professional life: their workplace, the marketplace and the lifestyle have to stay connected in a meaningful way.
What does it mean for wine brands? In the US, the percentage of Millennials who consume wine has increased from 10% in 2004 to 17% in 2006. Even more interesting, Millennials and GenXers are more inclined to drink wine than beer.
How did they become interested in wine? For some of them, their parents drank wine and they grew up with wine on the table. “My parents are both big into wine”, said 22-year-old Jennifer Hammons to journalist Deborah Pankey, Daily Herald Food Editor on November 30, 2005. ”At first I didn’t like it, but then it grew on me.”
There is much the same scenario for young people in France: wine is a food always on the family table. Young children are encouraged to taste a drop of champagne or wine during family gatherings. Later in their teens, they are given a third of a glass of wine or champagne with their meal. Why do they then reject wine to go on to beer, cocktails or liquors? Very often, as sociologist Céline Simonnet-Toussaint explains in her book Le Vin sur le Divan, young people under 25 reject wine because it is the symbol of the family. Young people want to experiment with their freedom, but they come back to wine at around 25, when they get their first job, their first “real” apartment and start settling into their new life.
Others discover wine by themselves – during a trip to a wine country, like Napa in the USA, Burgundy in France, Tuscany in Italy, Priorato in Spain or Porto in Portugal. They get interested, go to wine classes or tastings, join a wine club and explore wine stores to get good advice. Mostly, like the women, they listen to their peers, surf the Internet to read about wine and discuss their new passion in forums.
The wine industry is aware of the need of young people for more knowledge. At the same time, this new generation of wine drinkers is very different from preceding generations. It is the “coca cola generation": they have a much sweeter tooth, they are “zappers”, having known TV and the Internet all their lives, and they are used to getting what they want and paying a high price for it. After all, they pay $3.50 for their daily Starbucks cappuccino and download their songs for $1 or their movies for $5 every day on their iPod or MP3. They know that everything has a price and usually a high price.
Taking these parameters into account, some wine makers considered designing wines specifically targeted at Millennials and GenXers: fun labels, fruity forward wines and a high price. Millennials do not hesitate to pay up to $20 for a bottle of wine! Indeed, they do not yet have any big financial burdens: no children, often a two-income household, no parents to take care of, a good salary and a large disposable income. Unfortunately for the wine industry, they rarely buy the same bottle twice, because there is such a huge choice of brands. They want to be the first to discover a new brand or a new trend, the first to try them and share them with their peers.
Nonetheless, major groups have designed brands for Millennials as they have for women. Constellation designed 3 Blind Moose, Four Emus, Monkey Bay and other “fun” brands. There is no talk of terroir or winemaking on the packaging. The label does not tell a wine story, but a story of having a good time and fun with your friends. Those brands sell well. Gary Glass, former Vice-President of Marketing for Constellation’s Centerra Wine Company, estimates that 3 Blind Moose sold 175,000 cases in 18 months on the market.
At the same time, young people are not as comfortable as their elders when they buy wine. They can be adventurous, but they also seek quality and certainty. Whether they are American, European or Japanese, they will rely on a classic wine from Europe or a well known luxury brand from the New World. Wine is still a little intimidating for Millennials. It is the wine industry's responsibility to help the young generation to appreciate wine.
In countries where their number is not as significant, they are different from the Baby Boomers: in East European countries, the Millennials are the first post-communist generation and in Southern Europe, the first post-dictatorship generation. In emerging countries (South Korea, Russia), they are the first generation growing in a stabilized social environment.
The generation Y was born with Internet and finds it easy to interact with each other and then with the world. Forums, blogs, Facebook, iTunes and many other community sites are their favorite places to express themselves, share their ideas, tastes and distastes. Those young people think they can make life fit their specific needs and wants. Brands have to get used to engage in a two-way conversation with those potential consumers. Their favorite US brands, Trader Joe's, Ben and Jerry's and Whole Foods (to take into account only the brands connected to the wine and food business) communicate to their customers in a very personal and socially aware style. It's not so much what they communicate that how they do: Millennials like style, a real voice, and a bit of attitude. They love to blend personal and professional life: their workplace, the marketplace and the lifestyle have to stay connected in a meaningful way.
What does it mean for wine brands? In the US, the percentage of Millennials who consume wine has increased from 10% in 2004 to 17% in 2006. Even more interesting, Millennials and GenXers are more inclined to drink wine than beer.
How did they become interested in wine? For some of them, their parents drank wine and they grew up with wine on the table. “My parents are both big into wine”, said 22-year-old Jennifer Hammons to journalist Deborah Pankey, Daily Herald Food Editor on November 30, 2005. ”At first I didn’t like it, but then it grew on me.”
There is much the same scenario for young people in France: wine is a food always on the family table. Young children are encouraged to taste a drop of champagne or wine during family gatherings. Later in their teens, they are given a third of a glass of wine or champagne with their meal. Why do they then reject wine to go on to beer, cocktails or liquors? Very often, as sociologist Céline Simonnet-Toussaint explains in her book Le Vin sur le Divan, young people under 25 reject wine because it is the symbol of the family. Young people want to experiment with their freedom, but they come back to wine at around 25, when they get their first job, their first “real” apartment and start settling into their new life.
Others discover wine by themselves – during a trip to a wine country, like Napa in the USA, Burgundy in France, Tuscany in Italy, Priorato in Spain or Porto in Portugal. They get interested, go to wine classes or tastings, join a wine club and explore wine stores to get good advice. Mostly, like the women, they listen to their peers, surf the Internet to read about wine and discuss their new passion in forums.
The wine industry is aware of the need of young people for more knowledge. At the same time, this new generation of wine drinkers is very different from preceding generations. It is the “coca cola generation": they have a much sweeter tooth, they are “zappers”, having known TV and the Internet all their lives, and they are used to getting what they want and paying a high price for it. After all, they pay $3.50 for their daily Starbucks cappuccino and download their songs for $1 or their movies for $5 every day on their iPod or MP3. They know that everything has a price and usually a high price.
Taking these parameters into account, some wine makers considered designing wines specifically targeted at Millennials and GenXers: fun labels, fruity forward wines and a high price. Millennials do not hesitate to pay up to $20 for a bottle of wine! Indeed, they do not yet have any big financial burdens: no children, often a two-income household, no parents to take care of, a good salary and a large disposable income. Unfortunately for the wine industry, they rarely buy the same bottle twice, because there is such a huge choice of brands. They want to be the first to discover a new brand or a new trend, the first to try them and share them with their peers.
Nonetheless, major groups have designed brands for Millennials as they have for women. Constellation designed 3 Blind Moose, Four Emus, Monkey Bay and other “fun” brands. There is no talk of terroir or winemaking on the packaging. The label does not tell a wine story, but a story of having a good time and fun with your friends. Those brands sell well. Gary Glass, former Vice-President of Marketing for Constellation’s Centerra Wine Company, estimates that 3 Blind Moose sold 175,000 cases in 18 months on the market.
At the same time, young people are not as comfortable as their elders when they buy wine. They can be adventurous, but they also seek quality and certainty. Whether they are American, European or Japanese, they will rely on a classic wine from Europe or a well known luxury brand from the New World. Wine is still a little intimidating for Millennials. It is the wine industry's responsibility to help the young generation to appreciate wine.
Friday, February 22, 2008
Wealthy Chinese prefer French wine brands
China is one of the emerging markets for the wine business. I already mentioned on that blog that Chinese people are fond of wine and especially French wines.
A recent study conducted by VisaCard Worldwide and based on a survey of 1,800 respondents with an annual income exceeding $16,000 in Beijing, Shanghai and Guangzhou, identified the top brands of affluent consumers in key spending categories, such as automobiles, wine, consumer electronics and fashion.
This study confirmed the taste of wealthy Chinese people for French wines over other European wines and, even, local wines. 80.7 percent of the respondents think French wine is the best, with Chinese brands third after Italian wine and ahead of Spanish, Australian and German wines.
Why is that? In Wine Brands, I tried to answer - at least partially and as best as I could - this puzzling question. There is a “snob value” applying to Chinese wine drinkers. Indeed the drinkers’ profiles are typical of the emerging markets: rich people, executives, high-ranking officials and new millionaires. They drink expensive imported wines, while the middle-class people drink local wines, but everyone wants to drink wine. It is a matter of social status and image.
In Beijing and in Shanghai, wine is the gift that will give most pleasure and prestige, especially imported French wines.Wine is still a mystery to most Chinese. The average wine consumer in China is between 20 and 35 years old, relatively affluent and living in an urban area. Chinese consumers do not necessarily serve wine in the Western way. Iced red wine is popular--white wine is often mixed with coca-colas and red with sweet drinks. But, as in many emerging markets, education is provided by tastings in stores, while more traveling and studying overseas create an elite of connoisseurs.
Chinese wine experts believe that the market is made up of about 1,000,000 consumers with a potential of 30 million. More and more international managers and executives who studied abroad discovered wine while traveling in Europe. Back in China, they retained their interest in wine and broadened their knowledge. They are mostly interested in red because of the symbolism of the color in Chinese culture. Red is associated with luck, happiness and wealth. White is the color of mourning and death, which fights against white wine. It also uses the same word used for liquors and rice wine – “Bai Ju”. White wine, therefore, has a problem distinguishing itself from rice wine. The language too is a problem. Some wine names are very easy to remember: La Tour is “La Tu” and Lafite “La fei”, for examples in the Bordeaux area. Some names are so complicated that people are afraid to order them: “It’s embarrassing to ask for a good wine when its name cannot be understood by my friends because of its pronunciation”, said a Chinese executive to L’Amateur/The Wine Lovers journalist, Sophie Liu (Fall 2007).
In spite of all those problems, wine is becoming a major new trend in China.
A recent study conducted by VisaCard Worldwide and based on a survey of 1,800 respondents with an annual income exceeding $16,000 in Beijing, Shanghai and Guangzhou, identified the top brands of affluent consumers in key spending categories, such as automobiles, wine, consumer electronics and fashion.
This study confirmed the taste of wealthy Chinese people for French wines over other European wines and, even, local wines. 80.7 percent of the respondents think French wine is the best, with Chinese brands third after Italian wine and ahead of Spanish, Australian and German wines.
Why is that? In Wine Brands, I tried to answer - at least partially and as best as I could - this puzzling question. There is a “snob value” applying to Chinese wine drinkers. Indeed the drinkers’ profiles are typical of the emerging markets: rich people, executives, high-ranking officials and new millionaires. They drink expensive imported wines, while the middle-class people drink local wines, but everyone wants to drink wine. It is a matter of social status and image.
In Beijing and in Shanghai, wine is the gift that will give most pleasure and prestige, especially imported French wines.Wine is still a mystery to most Chinese. The average wine consumer in China is between 20 and 35 years old, relatively affluent and living in an urban area. Chinese consumers do not necessarily serve wine in the Western way. Iced red wine is popular--white wine is often mixed with coca-colas and red with sweet drinks. But, as in many emerging markets, education is provided by tastings in stores, while more traveling and studying overseas create an elite of connoisseurs.
Chinese wine experts believe that the market is made up of about 1,000,000 consumers with a potential of 30 million. More and more international managers and executives who studied abroad discovered wine while traveling in Europe. Back in China, they retained their interest in wine and broadened their knowledge. They are mostly interested in red because of the symbolism of the color in Chinese culture. Red is associated with luck, happiness and wealth. White is the color of mourning and death, which fights against white wine. It also uses the same word used for liquors and rice wine – “Bai Ju”. White wine, therefore, has a problem distinguishing itself from rice wine. The language too is a problem. Some wine names are very easy to remember: La Tour is “La Tu” and Lafite “La fei”, for examples in the Bordeaux area. Some names are so complicated that people are afraid to order them: “It’s embarrassing to ask for a good wine when its name cannot be understood by my friends because of its pronunciation”, said a Chinese executive to L’Amateur/The Wine Lovers journalist, Sophie Liu (Fall 2007).
In spite of all those problems, wine is becoming a major new trend in China.
Friday, February 15, 2008
Eric Asimov, Sichuanese food and China
Today, for the first time ever, I posted a comment on the blog of the famous journalist Eric Asimov. I'm still a little amazed by my own audacity and wonder if I won't get some problems because of my silly comments.
Whatever... What was it about? It is the Chinese New year and Asimov had some Chinese food to celebrate and suggested some wines to accompany the food. It happens I just had dinner at a wonderful Sichuanese restaurant in Bordeaux, France, "Au Bonheur du Palais", owned by Tommy Shan and his family. If you want to read my post, go to Eric Asimov's blog. I'd like to move ahead on some thing more related to my usual topic and obsession, wine brands.
In China, consumers are not used to drink wine with their food: it is a western habit. Luckily for France, the Chinese still think that French wines are the best. That is why importers of the Classified Growths and all the luxury wines are selling their wines with no problem – sometimes even more expensively than in Europe or in the US! Wine is definitively on its way in China!
An anecdote tells it all. On April 18th, 2007, in Beijing, some very happy Chinese tasted Chateau Haut-Brion blanc and Chateau Haut-Brion rouge: “it tastes better than rice wine or beer, and it’s better for your health”, said one of the lucky participants. Those words are milk and honey to the ears of many importers and owners of wine estates. Prince Robert of Luxembourg, whose family owns Chateau Haut-Brion, is aware of the growing interest of Chinese executives for luxury wines: “I think people are starting to understand the notion of quality brands. The luxury brand has ignited interest in the Chinese market. There's been a lot of work done by a lot of these luxury groups -- they're very visible here. I think the timing is right for us.”
Of course the market is still very small, but it is expanding dramatically. In 2005, China jumped into the world's top-10 wine-consuming countries. In 2006 Chinese wine imports doubled over the previous year, from 1.15 million cases to 2.2 million, and with annual consumption at a mere 0.7 liters per person, there is plenty of room for growth. No wonder wine-market analysts foresee a 36 percent increase in Chinese wine imports by 2010.
Whatever... What was it about? It is the Chinese New year and Asimov had some Chinese food to celebrate and suggested some wines to accompany the food. It happens I just had dinner at a wonderful Sichuanese restaurant in Bordeaux, France, "Au Bonheur du Palais", owned by Tommy Shan and his family. If you want to read my post, go to Eric Asimov's blog. I'd like to move ahead on some thing more related to my usual topic and obsession, wine brands.
In China, consumers are not used to drink wine with their food: it is a western habit. Luckily for France, the Chinese still think that French wines are the best. That is why importers of the Classified Growths and all the luxury wines are selling their wines with no problem – sometimes even more expensively than in Europe or in the US! Wine is definitively on its way in China!
An anecdote tells it all. On April 18th, 2007, in Beijing, some very happy Chinese tasted Chateau Haut-Brion blanc and Chateau Haut-Brion rouge: “it tastes better than rice wine or beer, and it’s better for your health”, said one of the lucky participants. Those words are milk and honey to the ears of many importers and owners of wine estates. Prince Robert of Luxembourg, whose family owns Chateau Haut-Brion, is aware of the growing interest of Chinese executives for luxury wines: “I think people are starting to understand the notion of quality brands. The luxury brand has ignited interest in the Chinese market. There's been a lot of work done by a lot of these luxury groups -- they're very visible here. I think the timing is right for us.”
Of course the market is still very small, but it is expanding dramatically. In 2005, China jumped into the world's top-10 wine-consuming countries. In 2006 Chinese wine imports doubled over the previous year, from 1.15 million cases to 2.2 million, and with annual consumption at a mere 0.7 liters per person, there is plenty of room for growth. No wonder wine-market analysts foresee a 36 percent increase in Chinese wine imports by 2010.
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