2009 Joe Rollo wine by hfIE18

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									Building the California Wine
       Brand in China


          May 21, 2009
      Overview of the Global Wine
                 Market


•   Supply/Demand
•   Provenance/appellations
•   Power of the importers/distributors
•   Retailer influence
•   Wine consumers (in general)
     Overview of the Global Wine
                Market


Supply/Demand

    More wine than wine drinkers

    Easy to buy, difficult to sell
      Overview of the Global Wine
                 Market


Provenance:

     Shelved by origin

     Appellation of origin as important as
    brand – part of the brand
       Overview of the Global Wine
                  Market


Importers/distributors

      Logistics/quality control

      Compliance

      Financial strength
       Overview of the Global Wine
                  Market


Retailers
     Consumers need guidance

     Availability is an endorsement
     Overview of the Global Wine
                Market


Consumers

    Price sensitive (85% of sales are
    less than $7/bottle)

    World exports are increasing
        California Wine Industry


•   4th in wine production (8%)
•   Recent exporter, rank 6th
•   4% share of world export market
•   Export 17% of production
  US Wine Exports Since 1986


1000


500


  0
  1986   1989   1992   1995     1998   2001   2004   2007



                              Liters   $
    China – U.S. Wine Export Data (2008)




                                         Global
                          Value ($$)                % Change
Rank         Country                     Share

                                                    2008/2007
         World           1,008,259,548    100.00           5.6
10       China              21,709,341      2.15          34.3
7        Hong Kong          25,578,630      2.54        243.90


    Perspective:

    China imports of wine represent less than 5%
    of the total wine market

    California wine has about 5% share of imports
                                                  Market Data
                                                   (Source: Euromonitor)


                         Sales of Wine by type: Total Value 2002-2007


RMB million                 2002       2003        2004       2005         2006       2007



Still light grape wine      16,429.5   18,100.8    20,020.8   22,052.5     24,628.4   27,471.2

- Still red wine            9,635.7    10,897.1    12,319.0   13,836.5     15,812.4   17,974.3

- Still white wine          4,966.2    5,302.7     5,720.0    6,145.4      6,655.5    7,246.0


- Still rosé wine           1,827.5    1,901.0     1,981.7    2,070.6      2,160.5    2,250.9

Sparkling wine              125.3      176.1       221.3      270.4        384.0      523.0

Non-grape wine              40,521.5   42,925.8    45,398.3   47,952.0     51,386.1   55,557.9


Wine                        57,076.2   61,202.8    65,640.3   70,274.9     76,398.5   83,552.2
              China – The Positives


• Economy remains strong – middle class
  growth
• Wine market growth – huge potential
• Consumers very brand conscious
• Educational opportunities – consumers
  seeking information
• Imported wine has a positive image
• Support by U.S. and Chinese government
 China – On the Other Hand


• Wine consumer base only a fraction of total
population
•Imported wines still mostly unaffordable to
local consumers
•Markets highly regionalized
   – Shanghai most developed, Beijing and
   Guangzhou follow Second tier markets remain
   undeveloped for wine
•Lack of transparency & reliable information
on shipping, regulations, market size
•Chinese wine industry??
• Competition
   – Low-price bulk sales remain significant
   – Premium market is hyper-competitive
   – Chinese wines
• Counterfeiting
   – Copyright protection difficult
• Global recession
   – Impact on Chinese consumption
              Consumer Research Findings


Research Overview
• Conducted in the top three metropolitan areas
   • 350 respondents in Shanghai, Beijing,
   Guangzhou
   • To compare the awareness, consumption, and
   image of California wine against wines
   produced by primary competitors such as
   France, Italy, Australia, Chile, South Africa and
   Germany.
             Awareness/Penetration of California Wine


                                                Mexico   China   UK (2006)
                                                   %       %         %
                                         Base    (357)   (350)     (354)
             Aware                                53%     23%       91%

             Trial as % of total respondents     37%      7%       78%

             Trial as % of those aware           69%     32%       85%




Q. Various
         Selling California

•Governor’s Trade Missions

•California Travel & Tourism

•California – The Perfect Climate

•The California Lifestyle
    Governor’s Trade Missions
• Signage
  featured the
  Governor, along
  with the logos
  for “California
  Grown” and the
  California
  tourism
  campaign
Governor’s Trade Missions
California Travel and Tourism
          Partnership
      “You’ll Be Back”
 Food and Wine TV Spot
discovercaliforniawine.com
             Wine Institute Activities

California Opportunities
   Trade Tours:
       Beijing – October 17, 2008
       Shanghai – October 21 & 22, 2007
    Trade Show & 3-city tour (June 2009)
    Media Trip to California
    Educational seminars (ongoing)
    Quarterly consumer tastings
    Retail/on-premise promotions
    Website launched July 2007
    California wines newsletter
    Annual consumer research study
California Wines Chinese Website
Food & Wine Education
Consumer Events - Shanghai
Trade Events – Beijing
   (Western Food Association)
California wine in China – A Progress
  Report, not yet a Success Story

								
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