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Identifying the next wave of Chinese wine drinkers will be key to Australia’s success by 04/02/2017  


ATTRACTING drinkers who are occasional or non-wine consumers will be a key battleground in China in years to come, Adelaide based industry expert Dr Justin Cohen says.

Australian wine — predominantly red — has experienced staggering growth in the past decade in China, with sales going from $27 million per year a decade ago to $520 million in the 12 months to the end of December, according to Wine Australia figures released last week.

Mainland China is now the number one export destination for Australian wines after experiencing 40 per cent growth last year.

Dr Cohen, who is a Postdoctoral Research Fellow in Wine Marketing and an industry engagement focused researcher at the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, spends a great deal of time in-country and in recent years has been involved in the publication of the China Wine Barometer with Dr Armando Corsi and Professor Larry Lockshin, funded by Wine Australia.

Dr Cohen said a lot of work had been put into understanding the Chinese market especially by Wine Australia.

“We’re making tremendous progress but there’s more we need to understand better.”

One of these issues was that much of the work done to date was documenting the habits and tastes of informed or regular wine drinkers.

“We certainly documented that well over three years, but the next step is the research that we’re starting, looking at people who are light buyers or non buyers and to really understand how to grow the demand for Australian wine.

“I think that becomes really important.

“The industry, whether it’s Australia or France or Chile or the United States, does fantastic work in China engaging what I would call highly engaged wine buyers. People who are really passionate about wine.

“But they are not representative of where most of the sales are going to come from.”

Dr Cohen said France was clearly dominant in terms of awareness among regular wine drinkers, with 93 per cent of people knowing it’s a winemaking country with Australia following on 70 per cent.

Cabernet sauvignon is recognised by about 72 per cent of wine drinkers but shiraz, which is Australia’s most iconic wine variety, is only recognised by 32 per cent. This figure would be much less among non wine buyers.

“If people don’t know you exist they’re not going to buy you,”Dr Cohen said.

“They’re not going to seek you out in a store and they’re going to gloss over you on a wine list.”

Awareness is a key issue which has been raised by Wine Australia and the Winemakers’ Federation of Australia in recent years, with even single regions in Europe such as Tuscany and Bordeaux having marketing budgets which outstrip the entire Australian marketing spend many times over.

“France and French wine regions stand out as being much more well known and have far greater associations with premium and luxury than Australia,”the final report of the China Wine Barometer, released in September last year, says.

“As more and more countries and regions export into China, consumers have much more choice and therefore, awareness of Australia, Australian wine regions and Australian grape varieties and wine styles has barely changed over the last three years.

“Australia and Australian wineries should continue to work hard to promote a unified image to wine drinkers and potential wine drinkers in China.”

Dr Cohen said he had also seen a trend developing where people were spending less on wine, which he saw as a sign of more educated consumers who now knew they didn’t have to spend a large amount of money to buy good wine.

In terms of how to get in front of Chinese wine consumers, a recent article written by Dr Cohen, Armando Corsi and Larry Lockshin which appeared in the Wine and Viticulture Journal entitled Fish where the fish are says that with the exception of very large brands which can set up their own distribution, a local agent or distributor is necessary.

“Three sales channels are dominant. Hypermarkets, specialty wine stores and online retailers have the highest penetration among regular drinkers of imported wine.

“However, 80 per cent of the channels investigated have penetrations above 50 per cent suggesting that for brands not able to sell through these core channels, or preferably in addition, there is certainly scope to succeed in other channels albeit with access to fewer shoppers.”

Dr Cohen said there were significantly more channels to choose from in China, but getting recognised was difficult.

“‘Prominence’ is also a challenge,”he writes.

“Most wine drinkers in China will have never heard of your brand. How do you stand out, get noticed and build awareness? Online platforms like T-Mall now make it possible forbrands to sell directly to consumers across China, but just having a T-Mall site doesn’t guarantee visitation.

“It is said that there are more than 70,000 brands from around the world that have T-Mall sites. “Without a strategy to drive visitation to your specific T-Mall site, investment in this channel will fail.”

Dr Cohen said he believed brick and mortar channels were still quite dominant.

Being visible on the shelf however was difficult, with retailers outside high end wine stores often very disorganised in terms of how brands and varietals are displayed.

“More often than not the front of the bottles won’t even be facing forward because all of the labels are in English or French or Italian and the Chinese people or the sales staff turn it around to the back label where it explains what it is in Chinese.

“We have to make it easier for people to buy the wine.”

As mentioned previously, Dr Cohen said that while a good job was being done educating involved wine drinkers, Chinese consumers who drank beer or the local spirit baijiu would not necessarily be reached by those actions.

A broad “brand Australia” approach, as advocated by WFA to increase awareness generally about the quality and affordability of Australian wine, could be of benefit, he said.

“You then need to think about where (physically) is Australian wine going?

“While it could be useful to think about advertising on CCTV, for example if you had the budget, and reaching across all of China, the reality may be that only a few Australian wine brands that reach across all of China. The rise of the major online platforms could shift the availability.”

Dr Cohen said more research needed to be done on where wine was currently being sold, and where it could be sold.

“We are piloting an approach for retail audits in a few cities at the moment.

“One of the things we’re working on ... over the next year is trying to understand the media that’s consumed by different cohorts of people who are regular wine drinkers, occasional wine drinkers and non wine drinkers, and we’re going to do that across an expanded network of cities.”

The China Wine Barometer report showed that over the period it was conducted wine purchasing had been evolving.

Dr. Cohen says that the reports which are readily available from Wine Australia’s website and through should serve as a benchmark of what we know.

“The future will see us integrating managerial knowledge from experience in market and designing research that is more fit for purpose to better serve the needs of the Australian wine industry. This will culminate in a strategy workshop at the end of this research with those on the front lines representing Australian interests turning insights into action.”