International wine producers are fighting their way into the Asian market, that today represents the world’s fourth consumer. But, the Chinese market is not for everybody according to the insiders. China has a distinguished agri-food culture that represents a challenge for Western businesses and yet it has a huge potential of growth. What is the future of Italian wine in China?
THE RUSH FOR A CHINESE EL DORADO
France, Australia and Chile are the top wine importers in China. Italian wineries have been trying for years to get some shares of the market, but with little success. The Italian non-performance was so unsatisfying that, at some stage, China seemed not to be a priority anymore. Wine import in Beijing accounted for 2,5 billion euros last year (+15%). Italian wine producers got 6% of the market share, with a value of 142 million euros in export (+18%). French producers detain the leadership of the market, with a share of 40%, and almost one billion euros in export. None the less, during the first trimester of 2018, made in Italy pushed forward and outperformed the market with increase of 41% becoming the fourth wine importer in China, overcoming Spain. Italy grew by 45% as for sparkling wines and 45% as for still wines. In the sparkling category, Italian producers are close to the French but it represents a small market amounting to 70 million euros a year. Chinese consumers appreciate mostly red wines today.
THE STUMBLING BLOCK HOLDING ITALIAN WINE
ICE-ITA Italian Trade Agency is optimistic about the future: Italy is today the fourth importer in China. In over a year Italian labels have increased their market share by 2%. His goal is to get closer to the top of the leading countries, by recovering the years where France has been the solo wine importer in China and place Italy just behind France. Italian share grew not only in export volumes: “In the last two years the average price of Italian wines in China rose from 3.63 euros per liter to 4.72, a price that is getting closer to the 4.82 euros per liter of French wines. Of course, it is still below the 6.42 euros per liter of Australian wines, but both French and Australian labels have been suffering from an average price erosion over the last few years”.
E-COMMERCE AS AN ESSENTIAL PHASE OF THE PROCESS
In China, e-commerce is essential and rapidly growing. About 19% of wine sales happen online. Over the last five years, it grew by 43% compared to traditional sales. Major retailers are struggling and today they account for 52% of the market. The situation of medium and small retailers is worst. E-commerce is dominated by Millennials: “Young people are the key of success in China – according to Yang Jian, General Manager at Beijing V&C Fine Wine – 70% of imported wine sales is purchased by consumers between 18 and 40 years of age”. Tmall by Alibaba Group runs over 56% of the digital sales, followed by JD.com (24,7%), Suning.com (4,3%) and Vip.com (3,5%). Social media is pivotal to be competitive in the Chinese market. WeChat is the most popular social platform. The role of influencers is also important. Lady Penguin is the “queen of wine” with over 1,5 million fans and 200 million visualization. Wang Shengan is popular too, with 700 thousand followers on Weibo, the Chinese Facebook.