In 2011, The Wine Management Institute of Dijon, in Burgundy, France launched a 5-year study on international wine blogs under my direction with the help of our 40 to 50 students coming from all over the world. The first year (2011) was devoted to American and Chinese blogs. We are on our way for the second year (2012) studying South European wine blogs, British, Canadian and Chinese (again) wine blogs. The purpose of the research is to draw a portrait of bloggers all around the world, a typology of blogs and a first approach of digital writing all over the world. The research aimed at helping the wine professionals to get to know this new strategy of communications and academics to have a better understanding of the practical aspect of marketing in the wine industry.

To read the full study in English.

Eve posted posted about China and the growth of the luxury market, including wine about two years ago. According to the luxury lifestyle blog Luxuo, “China is expected to be the world’s seventh largest wine consumer by 2013 as the nation’s thirst for vintages continues to grow amid an economic boom.”

A new challenge has presented itself in the past few months. After over 15 years experience on the web, I though I’d solved a lot of problems, but we have never had a reason to attempt to serve content into China until recently. After a Chinese-language site opened, we were getting reports of loading times so slow the sites were completely unusable. We visited Shanghai in May 2010, and it’s true that almost everything you look at it is abysmally slow from the average DSL connection. A site that uses Flash and video is not likely to load enough to be seen.

Recently, I did some tests in this area and found more complexity than I expected. The Internet in China, I’m told by one Chinese company, is not interconnected in the same way (peering) that most other countries employ. This means that even if you have hosting in Hong Kong (which you know is considered to be outside the mainland Internet) or in a single city like Shanghai, it still does not ensure decent delivery into other Chinese provinces.

Content Delivery Networks (CDN) exist for this reason, so we did more tests with 4 different CDN and found they all worked very well indeed – except in China! We tested Amazon Cloudfront CDN in Singapore and found it was no better than their US-based servers in delivery to China. There are specialized CDN for Mainland China (Akamai, ChinaCache, but these can be very costly. Most of our smaller producers whose wines are distributed in China will not be able to afford a five-digit monthly invoice to be present there. Even the less modest ones gasp when apprised of the costs involved.

We’re currently working on assembling specialized resources as a solution to this very real problem: Getting a wine web site to be not only visible, but usable. Even non-Flash, non-video heavy sites have a serious speed problem in Shanghai and other provinces, even if they show decent performance in, say, Hong Kong. Other complexities include licensing from the Chinese government, Chinese domain names (.cn,.com.cn), Chinese DNS and a presence of some kind at an address in China. We expect prices to drop significantly in the next two years, but until then, getting your web content into China will be tough going.

French wines are still the benchmark for China: they’re the best. Unfortunately, they’re very expensive: the high taxes are an important part of the outrageous prices.

Fortunately, some restaurants are ready to give their customers the opportunity to taste our greatest wines by the glass. And when I say the greatest, I’m not exaggerating: Château Palmer, Château Haut-Brion, Château d’Yquem, Clarendelle and many others are on the wine list.

The restaurant is M. and Mrs. Bund, owned by the French Paul Pairet. In the middle of the dining room, several Enomatic wine dispensers attract the attention.

Enomatic systems dispense wine directly from the bottle using  inert gas preservation. The flavors and characteristics of the wine remain intact for more than three weeks, as if the bottle had just been opened. This technology allows M. and Mrs. Bund restaurant to offer the  wines at a very decent price. The consumer can enjoy a glass of a wine he can’t really afford by the bottle.

M. and Ms. Bund Restaurant made its reputation thanks to this “wine by the glass” strategy. Of course, the food is deliciously French and the customers mostly Westerners, but it is a very original feature that is appreciated by many people. In this city where everything goes fast, evolves rapidly and everybody is improving skills and competences, a creative strategy based on a technical innovation is the best way to attract new consumers. In fact, most people in the restaurant were young business people, not afraid of a rather high price tag for a meal and nice wines. Shanghaï and its inhabitants are on the way up to success and a nice lifestyle – in contrast.

In 1999, the Web was still considered an innovation in Europe. In France, 11,6% were connected; 100,000 adventurous people are managing their bank accounts on line; e-commerce brings 200,000 euros! It was also the time of the Internet boom: start-ups are getting millions from angels and investors. After two years of euphoria and craziness, it is the krach. But, in spite of that, one third of the French population was connected – mostly by cable. Amazon.com and ebay.com opened their French site. A healthy sign of confidence in the new economy! In 2004, 12 million French were on line, more than 50% connected by cable or high-speed. Apple launched its iTunes platform in France. In 2005, two years after the US, French people became addicted to blogs. 2 million French bloggers appeared almost over night! In 2006, advertising on line brought several million euros. In 2007, the iPhone became available in France. In 2009, over 32 million French people were connected; they were aware of Facebook and discovering Twitter.

Of course, France is not the most Internet friendly country. Regulation is the keyword for the French administration on connectivity, privacy, wine, advertising, e-commerce. In spite of all the restrictions, France is opening up to the 21st century. To look at the future, one has to look at the US. In the last ten years, I saw tremendous innovations coming from the US in the wine industry: services for wineries such as VinoVisit.com, search engine specifically tailored to wine like ablegrape.com, think tanks like VinTank.com, on line wineries such as Crushpad, new packaging. I also saw some innovations coming from Europe, like the unique code designed by adegga.com in Portugal.

New consumers generated new marketing strategies and new trends: women and Millennials, emerging countries. China and India became the new powers – first by the exponential number of wine consumers but mainly by their potential production.

Let’s not forget the incredible wine communities spread all over the Internet in already existing communities: wine groups in LinkedIn.com, pages or groups on Facebook, networks on Twitter now helped by the search. Individuals became leaders and carry the new trends to new countries and new consumers. It would be incredibly long and difficult to mention all the innovations but i’m really amazed by what happened on the Net in ten years.

I look forward to witnessing and being a modest part of the formidable innovations that will take place in the next ten years. Welcome to 2010!

A well-established winery could be considering it doesn’t need a new web site as long as the current one is kept up to date and running smoothly. What’s wrong with such an idea? First of all, the winery itself evolved along the years: brands are created or changing, images are evolving and drinkers are moving on other wines or even countries. Then, the technology itself changed drastically over the last two or three years: the rise of social networks, the technological progress with the easy access to video and audio, the will of the consumers to become actors of the industry are important parameters to include in your communication and marketing strategy. Last but not least, a winery needs to heard seen and heard in order to sell its wines.

But what kind of web site should be designed? The first consideration should always be for the target audience. Are there age, cultural or national factors to take into account? Does the audience use the Internet frequently or are they going to be reading your site as a printout from an assistant?

What are visitors looking for? How obvious is the path to various features of the site? The usual print wisdom is to present information in a “who, what, when where” format. Naturally this has to be attractive, adapted to the “web space” and use an original approach. Straying too far from the expected navigation logic will limit and frustrate visitors.

Sometimes company graphics need to be modified to work well with electronic media. Only a specialist can determine if this is needed and how to do it. Specific localization can also be color-dependent. The obvious example are sites in China which look nothing like their American or European counterparts. At the regional level, sometimes colors are associated with a team or a well-known existing local brand.

In 1995 it was enough to be on the Web. In 2000, sites became more dynamic and today, interactivity and evolutive content have become part of the user’s expectations. On the other hand, web visitors have also become more wary about leaving their email or other data on sites they visit. Also impatient with unwanted advertising or useless information, they are installing filters that remove most of these. The user wants to be master of the experience, not be led around on a guided tour.

How do we know what the user is looking for?

Experience has shown that a number of basic principles apply whatever the subject matter or target audience of a web site. However, no one can foresee all the possible combinations of a visitor’s experience, computer hardware and software and connection speed. This is why we use traffic analysis and post-production usability testing. These and other tools help us evaluate how successful we have been in meeting visitors’ needs.

Beware of trying to transpose your own vision of what a site should be and concentrate on your audience. Success on the web comes from matching or exceeding the visitor’s expectations, presenting engaging content in an agreeable looking and easy to navigate manner.

Are there many web sites answering to those very basic principles? I’d be interested in hearing from you who go regularly on wineries’ web sites: what do you like? What do you dislike? What could be improved?

Are you located in a country where wine is considered a danger to your health, banned from everyday life and highly taxed? Consider moving to Hong Kong where wine is promoted as being good for your well-being and heart!

Imported wines are a huge success in Hong Kong, especially since the removal of the duty band. because of it, Hong Kong is becoming the getaway to the other Asian markets (mainland China, South Korea and Taiwan) and the fine wine trading hub of this part of the world. Wine imports rose 88% in 2008 while wine consumption is on the rise. According to Wendy Cheung, Assistant Secretary for Commerce and Economic Development, wine sales should double in Asia by 2012 due to the economic growth of mainland China.

Who is buying wine in China? Ten years ago, consumers were mostly expatriates. Now they are Chinese buying for pleasure but also for investment. Wine is also status related: it is chic and fashionable. Wine clubs and tastings are on the rise.

Convinced? Ready to move?

When the Western world is in financial trouble, eyes turn to other markets: India, China, Russia carry the hope of our sick economies for recovery. The wine business is no exception. Wine consumption is on the rise in India but it’s still very marginal compared to spirits and beer consumption. The yearly annual wine consumption is estimated at 10 millions liters – compared to 3,000 millions liters of spirits and 1,000 million liters of beer! The potential for the wine business is huge as long as the wine industry can convince the Indian consumer to trade beer and spirits for wine.

What could help the average Indian consumer to change habits? India produces wines from international grapes, such as Cabernet Sauvignon, Pinot Noir, Merlot, Shiraz and Zinfandel in red and Chardonnay, Chenin, Sauvignon, Clairette and Ugni in white. Chateau Indage, Sula, Grover, Vinsura and Vintage are the five top producers. Indage produced 3,600,000 l (40%); Sula, 2,700,000 25%); Grover, 1,250,000 15%); Vinsura, 250,000 and Vintage, 100,000. This shows Indians are familiar with our traditional grapes and wine styles.

On the other end, their wine and food traditions don’t play in favor of wine consumption. Indians drink tea with their meals. Wine is more the before dinner drink during the long pre-dinner meetings with friends and family. An other obstacle is the legal drinking age of 25. Last but not least, only the upper middle class can afford to drink wine because of its still high price for the average income. The middle class is estimated at 300 million individuals, but the upper middle class at a mere 30 million potential consumers. They are mostly located in three states: Maharastra, Kamataka and Delhi.

Imports are a very small part of the Indian market because of the high taxes and the little number of importers. Getting an import license costs the equivalent of about 8000 euros, which is a very high price for a local merchant. What are the market shares of the various importing countries?

- France: 40,5% (81,500 cases)
- Australia: 22,4% (45,000 cases)
- USA: 14,9% (30,000 cases)
- Italy: 8,2% (16,500 cases)
- Chili: 5,8% (11 750 cases)
- South Africa: 4,1% (8,250 cases)
- Germany and Argentina: 2,7% each (5,500 cases)
- Spain: 2% (4,000 cases)

What is the best strategy to approach the Indian market? First of all, there is no Indian market: each state is different and requires a specific approach. Second, there are two main doors: Mumbai, capital of the Maharashtra with a booming economy in spite of the terrorist threats and attacks and a good wine knowledge because the region includes 90% of the Indian vineyards and Bangalore, capital of the Karnataka, the Indian “Silicon Valley”, head quarters of the Grover Vineyards and full of young graduates back from Europe or the US with a thirst for Western lifestyle.

India is indeed one of the most promising market for imported wines but the “candidate” to this Eldorado has to be aware of the numerous traps: a family oriented type of business, very strong local cultures, a complex and subject to change system of distribution and high costs of imports in taxes. But the Indian consumers are curious of our wines and open to the adventure!

“A whole new generation is flocking to an ancient beverage [...]“, writes Courant journalist Cecily McAndrews on US Millennials. I already wrote a lot on Millennials’ taste for wine whether in the US or in Europe. What I’d like to point out is the rise of the emerging markets’ Millennials. Chinese and Indian young people went abroad to study, whether in the US or in Europe. They were exposed to a different culture and got a taste for wine. In India and China, wine is considered a status symbol. Back in their countries, Chinese and Indian Millennials bring back their new taste and a wider knowledge of wine than their elders. They are part of wine clubs and go to tastings. To me, they are a significant part of those new markets we need to explore. We have to learn more about them and their tastes, more about their wine and food culture in order to market successfully our wines. All our Western wines are not fit to please them: Champagne and bubbly wines are totally unknown in China, for example. Do we need to spend years and a lot of money to teach them how to enjoy them or should we try to market wines they are susceptible to like more spontaneously? This is the question we have to ask us and emerging markets’ Millennials could be the answer to our questions: they are the bridge between our two worlds.

Today’s WineSpiritsDaily newsletter is titled: “It’s good to be value”. According to its author, “After years of little or no growth, value brands are starting to gain share and grow at a faster rate, as seen in Nielsen numbers to October 18. Dollar sales of value spirits grew 2.4% in the 52 weeks, 3.2% in the 12 weeks and 4.3% in the four weeks.”

May I politely disagree? A financial crisis lasts for one, two, a few years if we’re really unlucky. A brand manager has to see further than the crisis. What will he/she be able to sell to potential customers if, once the crisis is over, there’s no new brand in the portfolio or only cheap brands? It doesn’t make sense. The best answer I found on the subject: “do you buy cheaper wine?” comes from a member of the OWC forum, Jeff Munsey, from “Sort this Out Winery” in Buellton, California, who answered to a would-be winemaker worried about making expensive wines in his future boutique winery:

“As a small winery, less than 2,000 cases, we are not planning for any issues related to economic concerns. We produce two brands, one under $20 and one with limited production reserves generally priced above $30. We split the odds on the revenue stream with feet on both sides of the fence. As a consumer direct winery with 90% of sales initiated in the tasting room, value is a much different equation that what is factored at a wine retailer. In a tasting room environment, Value=(Packaging+Environment) x Wine Quality. Notice no $ figure association. In our business model escapism replaces price point. Standing in front of a wine rack at a retailer, value is factored differently.

Consider this, 2,000 cases equals 24,000 bottles. Deduct the bottles we use for tastings, personal consumption, and trade 2,500 and I now only need to sell 21,500 bottles. Our tasting room is located 2-3 hours away from 9 million people in greater Southern California area. Add our consumer direct web based sales in the mix and we aren’t worried about anything including our prices. If I produced 15,000 cases, I would have already called Henry Paulson and asked to get in on some of the Federal TARP funded bailout because at this volume and larger the ripple effect is going to be big. Downturns in the wine market are going to be significant in the on premise market (restaurants). That’s where I think you will see the greatest weaknesses. Perhaps the consumer will benefit as restaurants may need to adjust margins because Cost of Goods will be less important that percap spending. No more 250% mark up.

The larger wineries that survive the economy are going to be those that are savvy about leveraging the concepts here on OWC. Ed, regarding your start up, by the time you have your juice pressed off and in the bottle, the entire country will have either been sold at auction to China or things will be getting back to normal. You should be able to get your $42 and work on a 48%-55% cost of wine. Good luck and do everything you can to keep your S,G&A expenses tight and you’ll do well. “
Doesn’t it make sense? Instead of burying your head in the sand while waiting for the economy to get better, go ahead with your plans and look ahead in time: think about new brands, reposition the existing ones and get rid of those who are not doing good in this new market.

Continental China is the Eldorado for the Western wine industry. At least, that’s what you would think when reading various studies and articles recently published. The main reason of this renewed or continued interest is the switch of the Chinese consumer from hard drinks to wine.

The French Castel Group is one of the leading wine companies, being the owner of the Nicolas chain of wine stores and until recently, of Oddbins as well as the new owner of the Bordeaux negociant Oenoalliance. In France, their brands, Baron de Lestac (Bordeaux) and Roche Mazet (Languedoc) have a lot of success and sell very well in supermarkets for under 5 euros.

Established in China since 1998, Castel owns a wine estate called Chateau Changyu Castel, and a bottling center in partnership with Changyu, the country’s biggest wine company in the country. “Castel saw its sales volume reach 5.5m bottles in 2008, double that of 2007. The company expects a further rise of 18%, or 6.5m bottles, in 2009″, wrote Jane Anson in Decanter.

The French are not the only one looking at the growing consumption of wine in China. The makers of high-end Italian wines from Tuscany are now turning their eyes towards continental China. Enoteca Italiana, makers of famous Tuscan red Chianti, its upmarket cousins Nobile di Montepulciano and Brunello di Montalcino opened The House of Tuscan Wine in Shanghai in July to promote their wines. At first, they were targeting the 40 to 60 year-old consumers as having the best disposable income. “Our new target is in a range of 20-35 years old: graduates with stable jobs, well-paid and with a Western model of lifestyle and food habits,” said Alessandro Mugnaioli, head of foreign relations at Italy’s wine promotion body Enoteca Italiana, to Reuters correspondent Svetlana Kovalyova.

Italian wine exports to China remain tiny at about $20 million in 2007 compared but they jumped 64 percent last year, making Italy the fourth-biggest wine exporter there after France, Chile and Australia.

The bet of most Western winemakers is that, even if the financial crisis affects China in 2009, the wine consumption will keep increasing and open new doors to receding traditional markets, such as the US or Japan.