1.7 million gallons of wine went from Chile to China in one year

Chilean wine producers aim to prosper on the booming Chinese export market. There are approximately 4.6 million consumers of Chilean wines, such as Sauvignon.

Chilean wine producers aim to prosper on the booming Chinese export market. There are approximately 4.6 million consumers of Chilean wines, such as Sauvignon.

China’s status as Chile’s largest trading partner is largely fueled by the Asian giant’s insatiable appetite for raw materials, but as its emerging middle class looks abroad to source luxury items, Chilean wine producers are betting the time is ripe to expand upon that relationship.

“Asia is a market that we want and is where we have to stay,” Alejandro Palacios said at a Wines of Chile Seminar in Santiago last Thursday. “China ranks as the sixth destination of shipments in volume, which have reached 2.4 million cases between April 2012 and March 2013.”

Palacios, representing the government funded export promoter ProChile at the event, elaborated on the growth of Chilean wine export to the Far East.

Chile had long used the internet to attract Chinese to their wine.The government of Chile in promoting Chilean wine in China understood this. With limited funding and an ambitious agenda, ProChile, the Chilean government body responsible for the promotion of Chile and Chilean Wine, found gold with their online campaign.

China’s rapidly growing wine industry is full of both opportunity and a challenge. The opportunity rests among China’s rapidly growing wine connoisseurs, who seek new and different types of wine. The challenge was that Chinese consumers often default to French wine and high prices, focusing on the status achieved by the association of consuming French wine.
What Chinese consumers didn’t know was that Chile has affordable and high quality wines. The Chilean government wanted to reach out to Chinese wine consumers and help them understand that there was more to choosing wine than just comparing price tags.

The primary objective of the campaign was to increase Chilean wine sales in China. Beyond that, ProChile wanted to promote Chile to create a stronger brand presence for Chilean wine. The result, after only three months conducting a multi-phased digital campaign, was that Chilean wine moved up in the rankings of wine exporters into China.

From April 2012 to March 2013 Chile exported 1.7 million gallons of wine to China. There are currently 4.6 million consumers of Chilean wine in the country, 1.6 million frequent consumers.

Over the last five years, China’s imported wine drinking population rose 60 percent to an estimated 19 million consumers — Chile was the second biggest beneficiary of the growth with its figures going up by 70 percent.

With wine consumption in China expected to triple from 0.3 gallons per capita to 0.8 gallons per capita by 2017, and with a population of 1.3 billion people, the number of cases of Chilean wine sold in China has plenty of room for growth.

Research analyst Riu Su from Wines of Intelligence, addressed an audience of Chilean industry experts on the topic of “Consumers of the Future in China.” Su urged Chilean wine-makers to invest in China, suggesting that it could become on par with the United States in terms of an imported wine market.

According to Su, China has imported 30 million cases of imported wine, compared to 129 million cases of domestic wine. Imported wine in China is growing at a much faster rate due to doubts over domestic products and an increasing middle class population who appreciate the quality of imported wine, have greater access to new world wines and seek to emulate a westernized lifestyle.

“Imported wine is such good quality and this has been realized by consumers nowadays,” Su told audience members at the Wines of Chile seminar. “There is also a general concern over domestic product quality overall in China. The image of domestic products is slightly damaged so consumers will pay or trade up to buy imported wine — imported wine will grow much faster than domestic wine.”

In 2012 China’s new Premier Xi Jinping introduced austerity measures to reduce official banqueting. The reduction in ostentatious consumption has led to the decreased consumption of imported wine amongst China’s prestige-seeking traditionalists, who typically consume wine at business occasions to show status.

Claudio Cilveti, managing director at Wines of Chile, the promotional body for Chilean wines, has observed such a decline.

“In the past six months since the government has limited their social activities, the sales of high end wines have been slightly damaged,” Cilveti told The Santiago Times.

Su identified four consumer groups who she predicts will counteract the decreased consumption of imported and premium wine amongst prestige seeking drinkers.

The consumption of imported wine amongst adventurous connoisseurs, new culture followers, health sippers and casual consumers is predicted to grow in the following decade, according to research from Wine of Intelligence, as China’s middle to upper class expands.

In response to concerns surrounding the safety of investing in the potential of China’s imported wine market, Su maintained that the four sectors set to increase amongst the upper-middle class population are less influenced by the party and tolerant of western influences.

“The Chinese government has an open attitude to welcome imported products for investment in China — not only in coastal cities, but in inland cities. The Chinese market is actually more opened up than before for wine brands to target the general consumer rather than the prestige-seeking elite,” Su told the audience at the Wines of Chile seminar.

Gonzalo Gómez, product manager at Vina Ventisquero winery, has conducted business in China for six years.

“The Chinese market is immature. There are a lot of opportunities to grasp,” Gómez told The Santiago Times.

Vina Ventisquero currently exports 1 million cases of wine to 50 countries abroad, which accounts for 85 percent of their product. China is the fifth highest recipient of exported Ventisquero wines.

Since 2006 Chilean wine-making company Carolina Wine Brands (CWB) have exported wine to AUSINO, a fine wine retailer based in Guangzhou in southern China with over two hundred stores nationwide. The CWB owned vineyard Viña Casablanca also exports wine to the high end wholesaler East Meets West (EMW) in Shanghai.

Christian Wylie, commercial director at CWB, plans to expand further in China with a new Chilean export manager to streamline trade operations in the company’s Shanghai office.

“CWB will lead wine exports to China in 2013,” Wylie told The Santiago Times.

Facing stiff competition
According to Cilveti, Chilean wines face strong competition from other sources of premium imported wines, such as Argentina and Australia.

“There is little room for competing with France, the main source of imported wines consumed in China, which enjoy a high class image,” he told The Santiago Times. “Our marketing strategy has been designed to enhance the wines of superior price, up to US$25, through attributes such as quality, diversity and innovation. The image of Chilean wine as well-priced affects the performance of such higher-value wines.”

Su highlighted the practicalities of investing in China and emphasised that success would depend on culturally appropriate branding and labelling of Chilean wine.

Potential investors should develop a social media presence to establish their brand credentials. Chinese consumers utilize social media at the point of sale. It has a high level of consumer trust as it is generated by users, whereas Chinese government announcements aren’t as trustworthy for information.

About the author

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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