Chinese wine culture goes mainstream
PUBLISHED in the South China Morning Post: Thursday, 03 December, 2015
The death-knell for expensive wine gifts clangs loudly and clearly during Beijing’s age of austerity. But China’s wine market is riding a wave of positive (although perhaps unintended) consequences. Gone are the days of seeking guanxi with a bottle of Hennessy XO. Wine culture has gone mainstream and a new generation of Chinese drinkers are enjoying more wine with greater frequency.
Wine drinking is shifting focus from the tables of upscale restaurants to the comfort of people’s homes. Restaurants are still the most popular place to drink, but home drinkers make up a growing proportion of China’s wine market. These tipplers relax with a 250RMB bottle a couple of nights a week, splashing out a few times a year on something more expensive. These – China’s first real wine consumers – will gradually, but comprehensively, fill the gifting gap.
Gift bans have hit hard for luxury brands and upscale restaurants. Sales of Hennessy XO, which was formerly a valued currency for businessmen and government officials, are down about 20 percent in China – a market that was once its bastion of power. Instead of seeing red over the negative impacts of China’s graft clampdown, savvy suppliers and winemakers are excited about the future.
Speaking at the recent Wine in China conference in Hong Kong, Judy Chan, CEO of Grace Vineyard, divulged that her company’s sales normalized to single-digit growth in 2015, after more than 10 years of double- and triple-digit growth. Chan stated that the rise of China’s first real wine consumers is a fascinating phenomenon for the wine industry to ponder. At last, wine drinkers are the people who are actually buying the wine. The average Chinese wine drinker these days is a less extravagant – but nonetheless aspirational – everyman or woman.
Aaron Lau, President and CEO of Cheil Greater China, said the gift bans offer a chance for Chinese wine drinkers to discover authentic wine brands – wines that are produced for consumption, not gifting. Certainly China’s parvenus will still seek brand names, but not the conspicuous logos of once-upon-a-time: “Chinese people are starting to look for authenticity in the products they buy,” asserted Lau, a marketing and communications expert.
Chan agreed, saying with no hint of sympathy, that she predicts a scaling back of the pretenders, as winemakers and suppliers who are just in the business to make a buck move on to the next moneymaking scheme. The real players will stay, meaning better quality wines in the market.
Authenticity may be in fashion, but extravagance is never far away in China. Lau’s research shows that young, affluent professionals are spending more money than ever on carpe diem lifestyles. Retail sales in China are strong (up 10.5 percent) compared to the overall economy (6.5 percent). “Some young people say they have so much money to spend that every day feels like Chinese New Year!” declared Lau. “They splurge like there’s no tomorrow, fearing the floodgates could close at any time without warning.” Other young professionals spend money they don’t have, borrowing from friends in anticipation of their ‘13th month’ bonus. For this group, wine drinking is part of an international lifestyle they’re keen to experience.
So, what – or whom – is influencing purchasing decisions in China’s brave new world of normal market behaviour? Habitually, Chinese drinkers will reach for a familiar French companion from Bordeaux made of cabernet sauvignon. Any other cohort is a hard sell. But the digital world’s reach is deep and immediate and it is reshaping China’s consumer landscape. ‘Turn on, tune in, WeChat’ is the mantra of 600 million per month. Chan recently conducted a WeChat Live lecture to an audience of 500 from the comfort of her balcony. Masterminded by a group of university students, Chan responded to texted questions by voice message. Examples like this demonstrate the power and potential of China’s digital revolution for wine education and sales.
But not all Chinese drinkers want to listen to experts. “Most don’t trust sommeliers, wait staff or salespeople”, said Dr Justin Cohen, Research Fellow at the University of South Australia’s Ehrenberg-Bass Institute for Marketing Science. They trust their own taste and stick to what they know. They rely on opinions from friends, build digital communities to share experiences and seek out aspirational brands. They follow bloggers, vloggers and celebrities they can relate to or admire. China’s rising wine culture is raw, uncut and uncensored.