Nine Key Words That Reflect China Wine Market in 2017
Write | WBO Xiao Jing
Translate and Edit | WBO Kiwi
For wine companies, 2017 is a year of changes, a year of farewell, also a year of hope.
WBO is now making a conclusion of key words on wine industry in 2017, and look forward to find out the internal rules and relations from these keywords, in order to point out developing direction for the industry.
China wine industry suffers overall price rises.
First of all, reduction of European grape output lead to price rise of wine production generally, with a rise of 15%-20% in entry level wines in Europe, that's why China market rose correspondingly.
Famous brands from France, the United States, Chile and other countries, especially second wines of the First Growth, American icon wine Opus One and the Chilean Almaviva rose a lot, which is nearly 20% higher than that of the same period last year.
Opus One
Chinese tycoons Chang Yu and Great Wall have also raised the price of low and medium end wines, and the general increase is more than 10%. The best seller under TWE has not stopped the pace of price adjustment, Penfolds BIN 389 and BIN407 has increased around 10%.
Wine price rise is also affected by the rising price of China's package and shortage of shipping capacity.
WBO Comment : Medium end wine is more stable in 2017, both high end wines and low end wines rose obviously, leaving more space for some imported wines which are filling in mainland China.
Leadership Changes
In December, 70-year-old Mr. Sun Liqiang, resigned as chairman of Chang Yu, then Mr.Zhou Hongjiang, general manager of Chang Yu, will be the successor.
Another China wine giant Great Wall also changes its leadership. Mr. Li Shiyi, general manager of COFCO Wine&Wine, was elected as the new general manager of the Great Wall wine division.
Eric de Rothschild, the 77-year-old chairman, will hand over the chairmanship of Domaines Baron de Rothschild to his daughter Saskia de Rothschild who has been co-director of the group for the last two years. The longstanding president Salin will move into a role as senior advisor of the group to ensure a smooth transition, and Prats will take over as president and CEO.
Saskia de Rothschild （second from left）
Robert Foye, TWE’s director of Asia, Europe, Middle East, Latin American market was promoted to the group’s Global CEO. Peter Dixon, general manager of North Asia has also been promoted to executive director of North Asia and global travel and retail. Meanwhile, Wu Mingfeng was promoted to general manager of China market.
Bruno Baudry, CEO of ASC Fine Wines, resigned on March, Suntory group appointed Yoshias the new COO, and Mr. Wang Jun was promoted to CEO of ASC.
WBO Comment : 2017 is the year that new replaced the old, is now developing the greatest power for wine industry.
Winery Takeover
Changyu and Chilean LAMBO SpA founded a joint venture Indomita Wine Company. Then it offered $48 million and acquired Chilean winery Bethwines in May.
In December 18th , Changyu invested CNY100 million for the acquisition of Australian five-star winery Kilikanoon Wines.
In May 3rd, Australian Vintage Ltd. (‘AVL’) has entered into a subscription agreement with Vintage China Fund, L.P. – a new partnership established by the founders of China’s largest online wine retailer, YesMyWine.
Mcguigan Wines
The subscription agreement provides for the placement of 15% of AVL’s existing capital (35,939,389 shares) to Vintage China Fund, L.P. at a price of 46.01 cents per share and will raise $16.5 million.
Chateau Latour also completed a major acquisition in October, they bought a Burgundy winery Clos de Tart. Besides, another winery Morey-saint-denis was also sold, the buyer is Artemis group, it is known that the deal price almost close to €250 million, the price has hit history record in Burgundy winery takeover.
The French luxury group CHANEL also completed a purchase in October. They bought St. Emilion Grand Cru Classe Chateau Berliqurt.
LVMH, the largest luxury group in the world, showed interest in wines from California and successfully acquired Colgin Cellars in Napa Valley.
WBO Comment : New World like Australian famous wineries and Old World like top end Burgundy wineries, were concerned by big companies, which is the investment indicator in global wine industry.
New Product Launching
Chang Yu officially launched the ninth generation of Noble Dragon, the biggest item in Chang Yu wines. Chang Yu then launched Zenithwirl 2016 vintage , another big item which updated its package from cork to screw cap.
Changyu Zenithwirl
DBR released new products too, the black classic series, following by another wine group TWE, who has just launched Maison de Grand Esprit. Yellow Tail has promoted its reserve wine with signature edition, this is their first renewal in 6 years.
Grand Dragon, one of the world's top organic wine giants, has launched the high-end organic wine C18, setting up price benchmark and undertaking the important task of integrating wine products of the brand.
WBO Comment : Mass product updating reflect market situation in China.
In December 19th, CCTV exposed a major production of counterfeits, police seized 60,000 bottles of fake Penfolds, the case involving up to CNY300 million, is the largest case of counterfeits seized in recent years. With rise of Penfolds's reputation, many Chinese counterfeiters aimed at these international best-selling products.
Fake Penfolds produced in Shandong
According to French media, 420,000 liters of Languedoc IGP level Wine, sold out as Bordeaux's top level wines, some were labeled as Pomerol, Margaux, and Pauillac. But average price gap between Languedoc IGP wines and Bordeaux village level wines implies 10 times and more.
WBO Comment : With multiple exposure on fake wines, consumers are getting more cautious on wine consumption, and the market share will be concentrated to brands and reputation, qualified importers and distributors.
More and more distributors transformed from group purchase only to group purchase and retail integrated business mode.
In latest three years, with the development of fragmentation of wine market and its distributing networks, the former group purchase has no longer been the target, China market is now developing into a new retail market.
Therefore, it’s very important to own a wine experience store or a studio, that means the combination of online and offline. In addition, it is also a key skill to introduce professional wine knowledge and simplify it to every consumer.
WBO Comment : Group buying market still occupies a large market share, but it is moving forward from relational group purchase to professional group purchase. Group purchase consumers are also increasingly asking for products with higher cost performance or more selling points.
Wine store in Beijing
There’s no doubt that wine training market is extremely hot in 2017, Chinese professional training market has hit the record in the frequency of course organizing and the number of participants. Business insiders holding WSET level-2 certificate and ISG intermediate certificate have gradually become a must.
However, are your customers interested in the profound wine knowledge?
Consumers may still want to find out the answer to their own questions, rather than hard wine terms. Therefore, although certificates for wine tasting is important, it is more practical to study how to deliver wine knowledge and make consumers trust you.
Of course, there is another type of training gets the same hot, that is, the market-oriented, practical training on wine business. Many entrepreneurs realized that wine market needs to push forward in a customer-friendly way, they are looking forward to more practical skills on wine marketing.
WBO Wine Business Academy
In 2017, WBO Wine Business Academy, has successfully held 6 times, becoming the most frequent and most practical wine business training institute in China.
Natural Disaster
The wildfire in California, USA, in October, caused great damage to the wine producing areas of Sonoma and Napa, and some famous wineries were completely burnt down. This may be the biggest black swan event in the world's wine industry in recent years.
In quick succession, in some European wine producing region like Portugal and Spain, there were also wildfires, and some vineyards were damaged.
WBO Comment : Wine industry has encountered a lot of difficulties in 2017, in addition to fires, hail happened as well. It is likely to be in a higher price cycle for a long time in the future.
Wildfire in California
China finally had the first Chinese world Master of Sommelier（MS）, that is, Lv Yang. This is a fantastic news for China wine industry.
After Fongyee Walker MW, who has been working in China for a long time, our master field has finally come to a real Chinese.
Apart from Fongyee Walker MW and Lv Yang MS, Robert Geddes MW also established his wine studio in Shanghai, focusing on strenuous cultivation in China wine market.
Lv Yang MS
WBO Comment : Talents and their influences in the field of wine have been gradually formed, and Chinese market respects more for such professional talents.
Nine simple words, concluded clues and rules of China wine market, and it’s time to say bye to 2017 and discover the new world of wine in 2018.