Damien Wilson - Getting it wrong on wine china @wbis2014
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How wrong we are on Wine China? Selling European wines in Asia
description
Damien Wilson, Professor at the ESC Dijon, talks us through the gap between the European perception of the Chinese wine market and the reality
Transcript of Damien Wilson - Getting it wrong on wine china @wbis2014
How wrong we are on Wine China?
Selling European wines in Asia
10 avril 2023 Contexte de la présentation : convention, cours, réunion
Inspiration
China has our wine attention It's big
Surface Area: 9,706,961 Population: 1,35 Billion (est.
Worldbank 2013) It's wealthy
Economic growth – 3X 2006 67% in poverty in 1996, 19%
today (and 1% - 31%) In concentrated areas
It's drinking wine Increasing at CAGR of 20%
(Rabobank 2013) 58,7% increase in per capita consump
tion 2008-2011
"Further import demand will likely be required to meet the rising consumption
gap"2
10 avril 2023 Contexte de la présentation : convention, cours, réunion
Concentration of wealth
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So, everyone is madly wine supplying China
China's wine stats Consumes
approximately 6,5% of world wine
Produces approximately 7,5% of the world's wine
Europe is heavily leveraged in China
This is what we don't want to see…
April 10, 2023 - page 4
THE JOURNEYHow wrong are we on Wine China?
10 avril 2023 Contexte de la présentation : convention, cours, réunion
What has happened so far…The Crisis…The wine boom of the 60s and
70s led to peak wine From almost 30 billion
litres (OIV 2011) Down to 23 billion Litres
by the early 90s (Demeter and OIV 2013)
From the early 90s to now Has remained more or
less static in aggregate With New market growth
picking up European declines
The False RecoveryWine has gone from being more
local to more global Wine market volume from
24 to 28 billion litres between '98 and '12.
Real value from US$274 to US$312 billion in US$2012.
That's a slight fall from US$11,42 to US$11,14 per litre.
In that same period, global wine imports increased by 50% (CBA and OIV 2011)
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
And, there are less economies of scale
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
So….
In a static market
Where the growth has come from a change from heavy to new consumers
Who need a Basic Consistent, and Enjoyable product
And are loyal to wines that satisfy these criteria
We've increased competition In number of producers And increased trade
between markets
And the costs of admin and management Systems of region and
quality control (More AOCs, DOs, shows, etc..)
And further fragmented the offer through new products
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
The problem…
What they want
To enjoy a glass of French red wine – a pleasure
What we're giving them
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Instructions
Rules
Constraints
Condescension
And we're telling them they have to learn about it to enjoy it
We're offering – a bottle of small parcel, of hand-managed, historically practiced, rigorously controlled, expensively distributed, and non-adapted, unfamiliar, plot-of-land-labeled beverage of unknown quality
10 avril 2023 Contexte de la présentation : convention, cours, réunion
In summary, we've been messing up
Europe has been going the wrong way for decades
Great European wines are still great They attract attention, but don't sell
themselves
Europe can't hold onto the glory days of the 60s and 70s eg. Fr: 10% VDQPS in 60s v ~70% of
wine is AOC today (ONIVINS 2007)
What worked then doesn't work now
Need a better balance between quality tiers and demand
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
And China knows it
So has carefully planned an entry to the wine sector
Which is easier with leadership that isn't affected by distractions
They're managing growth Production Quality/Price tiers Perceptions
With selective adaptation in their own industry
In the same period as the previous slide
The wine market in China has gone from 69 to 255 billion
2012RMB 1,2 to 4,3 billion
Litres
From 57,5 to 59,3 2012RMB/Litre
They're going up…
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
Europe is heavily leveraged in wine China
A bulk of wine import volume comes from Europe France has 47,8% of
wine imports by volume
Spain and Italy making up most of the remaining European
And the forecasts are for continued growth
But with China now the world's fifth largest wine producer (and growing)…
What's going to happen to Western Europe's golden wine market?
Is this a major cause for concern?
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
Actually, no.
In fact, Europe is in pole position here
Market dominance means Market advantages Influence
perceptions Customers for life
It's all about how this situation is managed
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
The wine sector needs to learn from its mistakes
And work with China
Tastes are different
Packaging is different
The consumption occasion is different
Motivation to drink wine is different
Business relationships are different
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
Try adapting to the needs of wine China
Packaging is different
Consumption around meals is ill-suited
Motivation is often to respect the guest's value, or celebrate an event for all
Business relationships are about slowly building up trust…
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
And then …
The Chinese market will be a source of pride instead of fear
Compare what China is doing to adapt Your offer Communications Wine tourism Planned production
And look to those making it work there…
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10 avril 2023 Contexte de la présentation : convention, cours, réunion
For your enjoyment…
So let's move onto a great case of wine success in China…
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