Canadian Winemakers Rush To Tap Booming China Market

Canadian Icewine Particularly Well-Known Among Chinese Businesspeople, But Counterfeits Remain Issue

Naramata Bench in British Columbia is known for its vineyards and orchards

Naramata Bench in British Columbia is known for its vineyards and orchards

Rising wine consumption in China has seen winemakers around the world rush to develop a foothold in this vast, yet highly segmented and polarized market. Although French labels continue to dominate at the higher end of the import spectrum, in recent years New World wineries from the US, Canada, and South America have increased efforts to crack the country, taking part in wine expos, holding promotional events and signing agreements to increase exports.

For American and Canadian winemakers in particular, whose countries aren’t as immediately associated with wine in the minds of many Chinese consumers as France or Italy, the key to success in China hinges on the youth of the market itself, relatively low consumer education, and the huge opportunity currently emerging in the mid-range wine segment.

As Canada’s Times Colonist wrote this weekend, more enterprising Canadian winemakers are making the effort to tap this increasingly lucrative mid-range market, working to promote Canadian wines as “more than just icewine”:

[Vancouver winemaker Holger] Clausen said he’s received calls in the past from Chinese companies, but none was the right fit until Vancouver-based export and import company Pomer knocked on his door.

Pomer’s parent company, Mascube, is based in Ningbo, a mid-size city known to be part of the ancient Silk Road and one of the fastest-growing income areas in China. Mascube recently launched Hoy Import Mart, a members-only wholesale club where business owners and clients pay as much as 50,000 RMB ($7,319 Cdn) for their registration shopping cards.

“It’s like Costco, but for very rich people,” said Pomer’s office manager, Flora Wang.

“They don’t know Aces or big Canadian names, they just know Mascube. They just trust us, so we feel our responsibility is very huge. If the product is not good, our reputation would be destroyed,” said Wang.

As Jing Daily has previously written, the popularity of icewine in China is a key promotional tool for Canadian winemakers, even those who don’t produce it. Canada exported nearly $9 million worth of icewine to China in 2009, according to Agri-Foods Canada, making the country the number one destination for the sweet, comparatively pricey stuff. But a consumer education gap and vast underdeveloped market in China’s vast interior could play in Canada’s favor, although difficulties remain:

The young wine market – with its inexperienced Chinese palates and growing disposable income – has created the perfect formula for Canadian winemakers.

That’s especially true in the rural or interior cities, where wine knowledge is not as sophisticated and purchase decisions are being based on decent price points – and the fact that red wine is believed to be good for your health in China.

However, with non-existent distribution channels and rampant knockoffs, entering China without a good partner can be risky.

So will Canadian winemakers succeed in occupying the mid-range niche, helping to develop a market that is also being eyed by American, Chilean and Spanish wineries? Much of it depends on their outreach and brand messaging, but interestingly enough, pricing will likely be the key here. If Canadian wineries set prices too low, they’ll find themselves competing with inexpensive domestic juggernauts like Dynasty or Great Wall — not a good thing for an imported winery. And if they set prices too high, they’ll compete head-on with better-known French labels. Pricing firmly at the mid-range, less anywhere from 300-1,000 yuan (US$47-155), will put these wines within the grasp of middle-class consumers in top-tier cities and make them expensive enough to present as gifts for businesspeople in the country’s interior. While the mid-range niche might not be as immediately lucrative or prestigious at the high-end of the spectrum, it will lead to more sustainable returns and a more regular customer base, particularly as more Chinese choose to drink wine at home rather than only at work functions or banquets.

 

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Culture, Food, Wine, & Spirits