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Wine - China - November 2014

Published By :

Mintel

Published Date : Nov 2014

Category :

Alcoholic Beverages

No. of Pages : 185 Pages

The abrupt shift in the wine market - with volume and average prices going down - seemed unimaginable when premium wines were seeing their retail values sky rocket. However, the sharp decline in importing and domestic production shows that the bubble is finally bursting. However, this is far from a disaster for the wine market with mass market returning as the key driver of the market. 
Table of Content

Introduction

Methodology
Limitation
Definition

Executive Summary

The market is still undergoing a restructuring process
Figure 1: Best and worst-case forecast of China retail value sales of wine, by value, 2009-19
High penetration means increasing drinking frequency has become key
Figure 2: Wine drinking habits, August 2014
Culture and knowledge barriers deter consumers from drinking wine
Figure 3: Reasons for not drinking wine, August 2014
There is a lack of regular drinkers in the market
Figure 4: Penetration of different types of wines, August 2014
Figure 5: Drinking frequency of different types of wines, August 2014
Word of mouth is the main information channel
Figure 6: Attitudes towards advertising channels, August 2014
Small pack wine shows potential
Figure 7: General attitudes towards wine, August 2014
What we think

Issues and Insights

How to revitalise the premium segment in the wine market
The facts
The implications
How can wine brands expand into lower tier city market?
The facts
The implications
Lack of drinking occasions becomes the most pronounced barrier
The facts
The implications

Trend Application

Collective Intelligence
Minimize Me
Return to the Experts

Market Drivers

Key points
The growing number of millionaires brings hope to the premium segment
Shanghai Free Trade Zone and its impact on wine category
The deal between China and EU ends disputes
New government scheme attracting investment on vineyards and wineries in the Western China
Growing number of consumers going online

Market Size and Forecast

Key points
The market is still undergoing a restructuring process
Figure 8: Value and volume retail sales for wine in China, 2009-19
The performance of imported wine from different regions varies
Wine from France
Wine from Italy
Wine from South Africa
Wine from Chile
Figure 9: Best and worst-case forecast of China retail value sales of wine, by value, 2009-19
Figure 10: Best- and worst-case forecast of China retail sales of wine, by volume, 2009-19
Forecast methodology

Market Share

Key points
The share of domestic wine is decreasing
Figure 11: Market share of leading brands in the wine retail market, by value and volume, 2012-13
The market is shifting towards entry level wine with accessible prices

Who’s Innovating?

Key points
The blurring product origins
French wine, made in China
New look of imported wine – made in France owned by Chinese
Downscale with quality at heart – the future of domestic vineyards
New taste of domestic wine – not too sweet anymore
New types of endorsement: president wine and expert signature wine
Food pairing helps wine to expand into new occasions
Companies and Brands

Key points
Changyu Pioneer Wine Company Ltd
Great Wall (China Foods)
Dynasty Fine Wine Group Ltd

The Consumer – Wine Drinking Habits

Key points
High penetration means increasing drinking frequency becomes the key
Figure 12: Wine drinking habits, August 2014
Older, richer consumers living in tier one cities tend to be wine drinkers
Figure 13: Drinkers of wine, by demographics, August 2014
Imported wine tends to attract more sophisticated consumers
Figure 14: Imported wine drinkers, by selected demographics, August 2014

The Consumer – Reasons for not Drinking Wine

Key points
Culture and knowledge barriers deter consumers from drinking wine
Figure 15: Reasons for not drinking wine, August 2014
Peer pressure deters consumers from drinking wine
Lack of knowledge remain as a key barrier
Wine is considered as good value for money
The steep learning curve stops business owners from trying wine
Figure 16: Agreement with the statement “There are too many wine brands to choose from”, by profession, August 2014

The Consumer – Drinking Frequency

Key points
There is a lack of regular drinkers in the market
Figure 17: Penetration of different types of wines, August 2014
Figure 18: Drinking frequency of different types of wines, August 2014
Drinkers and drinking habits of red wine
Figure 19: Drinkers of red wine, by types of red wine drunk, August 2014
Young consumers with high level of personal income tend to drink red wine on a weekly basis
Figure 20: Drinkers of red wine, by age and personal income, August 2014
Non-drinkers of red wine are likely to be women and high earners
Figure 21: Non-drinkers of red wine, by household income and gender, August 2014
White wine drinkers and their drinking habits
Figure 22: Drinkers of white wine, by selected demographics, August 2014
Female wine drinkers with high income are more likely to drink white wine every month
Figure 23: Wine drinkers who have drunk white wine several times a week, by gender and income, August 2014
Drinkers of sparkling wine
Figure 24: Sparkling wine drinkers, by city tier and personal income, August 2014

The Consumer – Attitudes towards Advertising Channels

Key points
Word of mouth is the main information channel
Figure 25: Attitudes towards advertising channels, August 2014
Online becomes a key channel to obtain relevant information…
but physical stores still play a vital role
Lower tier city consumers are more likely to be exposed under wine adverts
Figure 26: Agreement with the statement ‘I have seen wine advertisements in the past six months’, by city tiers, August 2014
High earners pay more attention to researching before making a decision
Figure 27: Online information searching behaviour, by income, August 2014
Brand ambassadors work better to attract the young consumers with higher income
Figure 28: Agreement with the statement ‘a brand spokesperson is important to me when deciding which wine over the other ’, by income, August 2014
Female drinkers in their twenties frustrated by lack of wine-related information
Figure 29: Agreement with the statement ‘There is a lack of information about wine in the media ’, by income, August 2014

The Consumer – Typical Spend on Wine

Key points
RMB100-299 is the pricing spot for drinking at home
Figure 30: typical spending on wine, August 2014
The gifting market has seen the biggest spending decline
Wine drinkers from lower tier cities are more likely to drink cheap wines
Figure 31: Consumers who drank wine costing less than RMB50 per bottle at home, by city tier August 2014
Premium products are more likely to be embraced by female wine drinkers with high income
Figure 32: Selected consumer spending patterns on wine, by gender and income, August 2014
Shanghainese are less likely to drink ultra-expensive wines
Figure 33: Selected consumer spending patterns on wine, by regions, August 2014
Young elites show potential in the high-end segment
Figure 34: Selected consumer spending patterns on wine, by age and personal income, August 2014
Experience with imported wine encourages consumers to trade up
Figure 35: Price of wine consumed, by type of wine drunk in the last six months, August 2014

The Consumer – Purchase Decision Making Process

Key points
Penetration of online shopping in wine category is still relatively low
Figure 36: Purchase decision making when buying wine online, August 2014
The lack of trust hampers the online retail channel for wine
Lack of detailed information makes online channels less appealing
The quality of service determines consumers’ willingness to buy
Figure 37: Purchase decision making process when buying wine from offline channels, August 2014
Buying from overseas: a challenge to the domestic market
Figure 38: Purchase decision making process when buying wine from overseas channels, August 2014
Offline channels play a vital role in the premium wine segment
Figure 39: Selected attitudes towards offline channels, by monthly personal income, August 2014

The Consumer – General Attitudes towards Wine

Key points
Small pack wine shows potential
Figure 40: General attitudes towards wine, August 2014
Highlighting suitable drinking occasions could help brands to stand out
Imported wines and trusted channels enjoy price premium
Young women are more interested in small packs
Figure 41: Agreement with the statement ’I would be interested in wine products in small packs’, by gender and age, August 2014
Highlighting suitable occasions provides another way to appeal affluent female consumers…
Figure 42: Agreement with the statement ‘there is a lack of wine products designed for specific occasions’, by gender and income, August 2014
…and women in their forties think wine can reflect their social status
Figure 43: Agreement with the statement ‘Drinking wine can better reflect one’s taste unlike other types of alcoholic drinks, by gender and income, August 2014
Lower tier cities remain as price sensitive
Figure 44: Agreement with the statement ‘The wine products available are mostly overpriced’, by city tier, August 2014
Product origin is not important to young consumers in their twenties
Figure 45: The disagreement with the statement ‘The origin of wine is a key factor in determining its quality’, by city tier, August 2014

Appendix – Wine Drinking Habits

Figure 46: Wine drinking habits, August 2014
Figure 47: Wine drinking habits, by demographics, August 2014
Figure 48: Typical spending on wine, by wine drinking habits, August 2014
Figure 49: Typical spending on wine, by wine drinking habits, August 2014

Appendix – Reasons for not Drinking Wine

Figure 50: Reasons for not drinking wine, August 2014
Figure 51: Most popular reasons for not drinking wine, by demographics, August 2014
Figure 52: Next most popular reasons for not drinking wine, by demographics, August 2014

Appendix – Drinking Frequency

Figure 53: Drinking frequency of different types of wines, August 2014
Figure 54: Most popular drinking frequency of different types of wines – Red wine, by demographics, August 2014
Figure 55: Next most popular drinking frequency of different types of wines – Red wine, by demographics, August 2014
Figure 56: Most popular drinking frequency of different types of wines – White wine, by demographics, August 2014
Figure 57: Next most popular drinking frequency of different types of wines – White wine, by demographics, August 2014
Figure 58: Most popular drinking frequency of different types of wines – Champagne/sparkling wine, by demographics, August 2014
Figure 59: Next most popular drinking frequency of different types of wines – Champagne/sparkling wine, by demographics, August 2014
Figure 60: Most popular drinking frequency of different types of wines – rosé wine, by demographics, August 2014
Figure 61: Next most popular drinking frequency of different types of wines – rosé wine, by demographics, August 2014
Figure 62: Attitudes towards advertising channels, by most popular drinking frequency of different types of wines – Red wine , August 2014
Figure 63: Attitudes towards advertising channels, by next most popular drinking frequency of different types of wines – Red wine , August 2014
Figure 64: Attitudes towards advertising channels, by drinking frequency of different types of wines – White wine, August 2014
Figure 65: Attitudes towards advertising channels, by drinking frequency of different types of wines – Champagne/sparkling wine, August 2014
Figure 66: Attitudes towards advertising channels, by drinking frequency of different types of wines – rosé wine, August 2014
Figure 67: Typical spending on wine, by drinking frequency of different types of wines – Red wine, August 2014
Figure 68: Typical spending on wine, by drinking frequency of different types of wines – White wine, August 2014
Figure 69: Typical spending on wine, by drinking frequency of different types of wines – Champagne/sparkling wine, August 2014
Figure 70: Typical spending on wine, by drinking frequency of different types of wines – rosé wine, August 2014
Figure 71: Typical spending on wine, by drinking frequency of different types of wines – Red wine, August 2014
Figure 72: Typical spending on wine, by drinking frequency of different types of wines – White wine, August 2014
Figure 73: Typical spending on wine, by drinking frequency of different types of wines – Champagne/sparkling wine, August 2014
Figure 74: Typical spending on wine, by drinking frequency of different types of wines – rosé wine, August 2014
Figure 75: Channels used to obtain information on wine, by most popular drinking frequency of different types of wines – Red wine, August 2014
Figure 76: Channels used to obtain information on wine, by next most popular drinking frequency of different types of wines – Red wine, August 2014
Figure 77: Channels used to obtain information on wine, by drinking frequency of different types of wines – White wine, August 2014
Figure 78: Channels used to obtain information on wine, by drinking frequency of different types of wines – Champagne/sparkling wine, August 2014
Figure 79: Channels used to obtain information on wine, by drinking frequency of different types of wines – rosé wine, August 2014
Figure 80: General attitudes towards wine, by most popular drinking frequency of different types of wines – Red wine, August 2014
Figure 81: General attitudes towards wine, by next most popular drinking frequency of different types of wines – Red wine, August 2014
Figure 82: General attitudes towards wine, by drinking frequency of different types of wines – White wine, August 2014
Figure 83: General attitudes towards wine, by drinking frequency of different types of wines – Champagne/sparkling wine, August 2014
Figure 84: General attitudes towards wine, by drinking frequency of different types of wines – rosé wine, August 2014

Appendix – Attitudes towards Advertising Channels

Figure 85: Attitudes towards advertising channels, August 2014
Figure 86: Most popular attitudes towards advertising channels, by demographics, August 2014
Figure 87: Next most popular attitudes towards advertising channels, by demographics, August 2014

Appendix – Typical Spending on Wine

Figure 88: Typical spending on wine, August 2014
Figure 89: Most popular typical spending on wine – Drinking at home, by demographics, August 2014
Figure 90: Next most popular typical spending on wine – Drinking at home, by demographics, August 2014
Figure 91: Most popular typical spending on wine – Drinking out of home, by demographics, August 2014
Figure 92: Next most popular typical spending on wine – Drinking out of home, by demographics, August 2014
Figure 93: Most popular typical spending on wine – As a gift, by demographics, August 2014
Figure 94: Next most popular typical spending on wine – As a gift, by demographics, August 2014

Appendix – Channels Used to Obtain Information on Wine

Figure 95: Channels used to obtain information on wine, August 2014
Figure 96: Channels used to obtain information on wine – Online, by demographics, August 2014
Figure 97: Channels used to obtain information on wine – In-store, by demographics, August 2014
Figure 98: Channels used to obtain information on wine – Overseas, by demographics, August 2014

Appendix – General Attitudes towards Wine

Figure 99: General attitudes towards wine, August 2014
Figure 100: Agreement with the statement ‘I would be interested in wine products in small packs (eg 100ml) for wine tasting’ by demographics, August 2014
Figure 101: Agreement with the statement ‘There is a lack of wine products designed for specific drinking occasions’, by demographics, August 2014
Figure 102: Agreement with the statement ‘The wine products available are mostly overpriced’, by demographics, August 2014
Figure 103: Agreement with the statement ‘Very frequent promotions of a wine product will put me off from buying it’, by demographics, August 2014
Figure 104: Agreement with the statement ‘Imported wine products are not as good value for money as domestic ones’, by demographics, August 2014
Figure 105: Agreement with the statement ‘I am willing to stick to the reliable wine purchase channel even if it doesn’t offer the lowest price’, by demographics, August 2014
Figure 106: Agreement with the statement ‘The origin of wine is a key factor in determining its quality’, by demographics, August 2014
Figure 107: Agreement with the statement ‘The quality of imported wine products are better than domestic ones’, by demographics, August 2014
Figure 108: Agreement with the statement ‘It is worth paying more for wine from vineyards with a long history’, by demographics, August 2014
Figure 109: Agreement with the statement ‘Drinking wine can better reflect one’s taste unlike other types of alcoholic drinks’, by demographics, August 2014
Figure 110: Agreement with the statement ‘When deciding which wine product to buy, it is better to refer to both online and offline information’, by demographics, August 2014
Figure 111: Agreement with the statement ‘It is difficult to choose among so many wine brands’, by demographics, August 2014

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