Analysis - The E-Guide to Selling Wine in China
China's emerging wine consumers are "wired to the gills", and it already looks as if any prospective exporters to the country will need to make the internet a central part of their strategy.
Figures released earlier this month on China's e-commerce market show a 66% increase in overall online sales in 2012 versus 2011, to RMB1.3tn (US$190bn). Last year, 242m people in the country bought something on the internet, and around half of them used mobile technology to do it, according to data released by the China Internet Network Information Center.
For anyone trying to sell anything in China, therefore, cyberspace is a must. This point is reflected in wine, with China housing more wine drinkers who purchase at least some of their wine online than any other country.
Research released yesterday (25 April) by Wine Intelligence, Vinexpo and The IWSR shows that 27% of wine consumers in China buy wine online, versus 18% in the UK and 15% in Germany. Incidentally, it seems the French have yet to conquer the art of wine web surfing, while US consumers are largely precluded from doing so by their country's three-tier distribution set-up.
By 2020, the research predicts that around half of China's wine consumers will buy online, although not exclusively, while the UK will just about reach the penetration levels that China is already at.
"It's still a really small proportion of people who are into imported wine in China," cautions Richard Halstead, co-founder & COO of Wine Intelligence. "The estimated range is from 20m to 50m people, and we think it's more like 20m to 25m," he told just-drinks on the sidelines of Vinexpo's wine market briefing in London yesterday.
"Those who do buy imported wine are the elite of Chinese society," Halstead adds. "These people live in the cities and are wired to the gills. We have grown up buying wine in shops, but their idea of wine information has come of age with mobile internet."
This culture tests a widely-held theory in the wine industry that, when it comes to engaging with consumers and pushing a sale, there's no substitute for having a living, talking person to explain things face-to-face.
Halstead points out that many Chinese consumers appear to have a different perspective, often perceiving the internet as a safer retail medium than many shops. Indeed, according to both Halstead and Vinexpo CEO Robert Beynat, there is an inherent scepticism about wine sold in shops being what it says it is.
All of this said, the key challenge of securing the right distribution partner remains as prescient as ever in China. Also at issue is whether value sales can keep pace with rising volumes. At the moment, Beynat said, the figures suggest that volume is outpacing value, but it is thought that one reason for this could the growing presence of cheaper, domestic wines hitting the market.
In addition, while the internet is a powerful tool, 77% of Chinese wine drinkers also buy wine in hypermarkets. With the likes of Tesco and Carrefour barely scratching the surface of the country, hypermarket wine sales are expected to increase strongly. By 2020, 83% of Chinese wine consumers should be using hypermarkets, and many of them will be women, according to this week's research.
However, even in hypermarkets, digital technology is likely to become increasingly important for engaging with consumers. Halstead highlighted the use of digital innovations, such as apps, virtual sommeliers and live winemaker link-ups in-store, as key ways many retailers worldwide are looking to communicate better with shoppers.
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