Population and consumption
There are 1.38 billion people in China. While only 38 million are currently enthusiastic wine drinkers, consider the potential!
In its March 2017 issue, The Drinks Business magazine predicted, “Wine sales in China will grow by 39.8% in the next three years, leading the country to become the world’s second largest wine market after the US.”
Based on how wine culture is promoted by the Chinese wine industry, the change in lifestyle and preferences and the increased association with imported products, all predictions are that the current per capita consumption of 1.34 litres will increase dramatically over the next three years.
While China is currently South Africa’s sixth biggest export market for wine, many of the traditional wine markets are under pressure – both economically and politically. The future of SA’s biggest wine market, Great Britain, is uncertain given sterling’s volatility and the imminent implementation of Brexit.
Year on year, the Far East outperforms all traditional wine markets for South Africa when it comes to percentage growth in bottled wine exports (Sawis).
A report in African Business Magazine recently stated, “If bulk exports are taken into account, then total exports to China in 2016 jumped to 15.76 million litres. This means that while South Africa’s total exports (packaged and bulk wine) worldwide increased by 9.8%, total exports to China increased by 39%.”
The quest for luxury
The generational grouping of Chinese aged 20 to 40 exhibits interesting behaviour. This dynamic upper middle class prefers luxury and international brands and has spending power to match.
There’s a strong aspirational culture for owning the latest brands and imported products and as wine is not yet part of an everyday lifestyle, imported wine in particular falls in the luxury products category.
Despite a global economic downturn, the trend for luxury goods in China continues. China’s 520 Day initiative for example celebrates a second Valentine’s Day focused on luxury gifting. Brands such as Cartier and Givenchy use WeChat campaigns to exploit this, successfully capitalising on both e-commerce and social media influence.
What makes China distinctive is how sales platforms and concepts differ from traditional wine markets. Tighter anticorruption control has affected the market, but gifting for instance remains an essential part of Chinese culture and a significant aspect of the market. Wine gifts are especially popular during Chinese New Year and the Mid-Autumn Festival and account for more than 50% of annual wine sales. From a production side, it allows for large volume production and lower overheads.
China is also bold when it comes to marketing and promotion concepts. Forget homesteads on labels and Parker ratings for wine marketing. The Chinese are fearless when it comes to colour and visuals and innovative with online sale strategies and marketing. This makes China an interesting market, to say the least!
With traditional markets under pressure, you have to look elsewhere, but China offers more than just another trading floor. Its sheer size and volume can be daunting but it provides endless possibilities. Continuous consumer development and a forthright approach to product development, marketing and sales make China a fascinating place to be for those who are open-minded and hungry for business – which is what the South African wine industry will have to be in order to survive.”