The future of wine in China
Given the trend of the global macroeconomic environment in this article we will focus on the three possible scenarios for the future of the wine industry in China.
Scenario # 1: Wine becomes a Consumer Packaged Good (GPG)
Chinese consumers drink wine on several occasions and the wine is no longer considered a luxury item. In other words, the wine has lost its prestige and is just another alcoholic beverage among others like beer or baijiu.
Distributors sell many wines assembled first prize and sell them as consumer goods. Some upscale niche products remain successful but marketing investments will drive much of this success.
In this scenario, the key success factors for wine companies will be the ability to build a brand portfolio carefully and reach a critical size for industrial production.
Scenario # 2: Wine as a Niche Product in China
In this scenario a large part of the Chinese middle class consume wine occasionally and for special occasions. The wine will be available in many on-trade and off-trade channels. Many specialist retailers will emerge and none will dominate.
At the same time, there are a number of wine lovers in every city across China, and for them the country of origin remains an important differentiation factor. French wines will continue to have a great reputation, but will no longer be dominant. Wine lovers will learn about wines from other countries and many enology clubs will emerge for consumers excited to buy their wine in specialist retailers whose advice seem reliable. Some fans will engage in collection of fine wines they will look as a serious investment.
In this scenario, the key success factor for wine companies will be the ability to serve the mass market more slowly with a range of attractive brand (interesting from the point of view of the consumer and in term of profitability).
Scenario # 3: the wine becomes another success of China’s exports
This scenario differs from the first two in that the focus is not only on the domestic market, but will consider China as an emerging key player in the wine market partly because traditional wine regions as France and Italy can no longer produce sufficient quantities of quality wine, forcing growers to produce vines in new regions such as China.
The demand for wine will be driven by new scientist reports showing a link between the act of drinking wine on a daily basis and the prevention of chronic diseases and some cancers. Innovations in wine labels will enable consumers to obtain information such as the vintage and even the average sales price (ASP). In this transparent wine market, Chinese wines will become more popular with its low price and relatively good quality.
A key success factor here will be the ability to create a portfolio of relevant wine brands able to fit different kinds of consumers ‘ tastes around the world and to understand the specificities of the distribution’s system of each market.
Of course it is likely that these three scenarios achieve jointly and in a complementary manner with the emergence of a mass market, the consolidation of a public of connoisseurs interested in niche marketing and the growth of Chinese’s wines exports.