10

Trends for the Chinese

Wine Industry in 2013

10 Trends in the Chinese Wine Market for 2013

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Introduction

Now ocially in the Chinese New Year, we take 5me to recap our predic5ons for
the Chinese Wine Industry in 2013.

In the following presenta;on we briey outline 10 trends we believe will shape the
Chinese wine industry over the next 12 months.

To con;nue the discussion join us on TwiDer (ChinaWineViews) and LinkedIn
(China Wine Insight).

10 Trends in the Chinese Wine Market for 2013

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1. Market Consolidation

The current number of wine sellers in the Chinese market is unsustainable. 2013 will see see hard
trading 5mes for most and many will exit the industry en5rely.

According to Radobank, there were 3,863 wine importers in 2011 (and that doesnt account for the 100s of unocial
ones), up 73% from 2010 and up 200% in 5 years. Even in a market the size of China, this number is unsustainable.

Just in the last few weeks, Dynasty, one of Chinas largest domes;c wine companies, posted a prot warning amongst
dicult trading condi;ons. The take away from writer Doug Young of the South China Morning Post was A new prot
warning from Dynasty reects a burs;ng bubble in Chinas overheated wine industry, with a major consolida;on likely
to start in the second half of this year.

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2. Changing Expectations

China will no longer be seen as a quick win market.

As compe;;on becomes increasingly erce, the ;me for easy sales and high margins is rapidly becoming
a thing of the past. In recent years, China has been seen by many as the answer to falling margins in
more mature markets.

However, biDer experience is teaching many wineries that doing business here involves a signicant
learning curve, high costs and o_en lower than expected volumes.

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3. Increased Commitments

As expecta5ons change and compe55on increases, wineries will move to take a more ac5ve approach
in the market.

ADemp;ng to beDer understand market trends, establishing a local presence and increasing ways in
which they can engage and inuence key stakeholders are already becoming increasingly common.

As part of this, 2013 will see more foreign wineries move to create a presence on Chinese social media.
Companies across various industries are nding social media to be an eec;ve channel to nd and
engage their target audience; the wine industry is no excep;on.

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4. Online Coming of Age

Online wine retailors will con5nue to increase their inuence as a major sales channel.

According to Wine Intelligence, the two major online wine retailors are currently Yesmywine.com and
Tmall. They point to two reasons behind the growth of online sales; improving technology and the ability
for trusted online retailors to reduce concerns about fake wines.

Wed add a third; the closeness of the online world to consumers. The future wine market in China rests
with the younger popula;on, a popula;on whose day-to-day life is seamlessly integrated into the online
world. For these consumers, buying online not only allows for quick price comparison, access to
informa;on and user generated reviews but represents a natural and convenient solu;on that ts with
their busy lifestyles.

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5. A More Sophisticated Consumer

2013 will see con5nued diversica5on in the tastes of consumers in core markets such as Beijing,
Shanghai and Guangzhou.

Last summer saw a surge in sales of white and sparkling wines fueled mainly by the increasingly
important female segment. 2013 will see this trend con;nue as well as increasing aDen;on paid to
bou;que wines from non-mainstream regions. The Chinese wine lover, especially those aged under 35,
love to experiment with wines and are increasingly looking to less mainstream op;ons.

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6. Tier 2 & 3 Cities

Following the trend in Tier 1 ci5es, the wine market in Chinas 5er 2 ci5es will begin to evolve.

Whilst the situa;on in regional ci;es is currently in a chao;c state, 2013 will see the rst signs of an
increasingly professional industry emerge. Before that happens however, many sellers in these ci;es will
go bust before a more professional trade appears.

On the consumer front, more inhabitants in Tier 2 ci;es will start to move towards consuming wine
opposed to just gi_ing it. Wine Intelligence says there are currently around 20 million consumers of
imported wine in China just 1.5% of the popula;on. They believe this will increase to around 80 million
by 2020, with consumers from Tier 2 ci;es making up the bulk.

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Trends Continued

7. Trading Down

8. Miniaturiza5on

Streamlining of distribu;on models, increasing

As wine moves to become enjoyed on a more

wine knowledge, a changing demographic and

regular basis, single serving boDles will

a more transparent pricing environment will

become increasingly popular. This will be

lead to an increasing willingness for

especially true in the city-based convenience

consumers to trade down.

store format.

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Trends Continued

9. A Focus on Fake

10. Chinese Wine to Go Global

The Chinese government has iden;ed solving

the issue of fake wine as a priority for the

While the focus of the Chinese wine industry

industry. 2013 will see increased pressure

is rmly on imported wines into China, 2013

from government, industry and consumers to

will see more Chinese wineries seek lis;ngs in

work together to improve this problem.

overseas markets, form strategic joint

Furthermore, wineries that make an ac;ve

ventures and purchase foreign wineries..

eort to employ ac;ve an;-counterfeit

measures will benet from posi;ve consumer
sen;ment.

10 Trends in the Chinese Wine Market for 2013

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Contact Us
Contact us to discuss more about any of the points raised in this presenta;on or to inquire
about how our exible and cost eec;ve solu;ons to help wine business succeed in the
Chinese market.

Contact Details

Winterless Center B-1201, 1 West
Dawang Rd, Chaoyang District, Beijing,
China, 100026.

E: nick@chinawinesolu;ons.com
M: +86 18210211487
W: www.chinawinesolu;ons.com

gli

10 Trends in the Chinese Wine Market for 2013

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