Australian wine is flowing back to China and I recently wrote about the current state of affairs for Wine Searcher. The interviewees included Ma Huiqin, a professor and marketing expert at China Agricultural University. We had so much material that I turned it into the Q&8 below. (You can also check out more Q&8s here.)
On general wine drinkers
Australian wines still have good potential because they are strong in quality and marketing capacity.
I tasted some Australian wine [at a dinner recently] and for more mature wine drinkers, those who were consumers before COVID, Australian wine still means something in terms of quality and relatively good value.
But Australia is facing a changed market. The overall market is shrinking. People are consuming much less than in 2019. During our dinner, everyone was talking about the good times of 2012.
On young consumers
We do see big changes in the Chinese market in the past three or four years. What I observed from the students is that four years ago, they were pretty young, they were teenagers in high school. Now they are 20, 21 or 22, and they do not have any impression or memory of Australian wine, they have no idea of Australian wine.
That means if Australia wants to get back the market share, they need a comprehensive marketing strategy. This is one reason we see brands like Penfolds establish student scholarships or foundations.
On the Penfolds position
For a big brand like Penfolds, coming back is easier because it has already built up a big reputation. Even if many people haven’t tasted Penfolds, they have heard the name.
Plus, it’s not only a famous brand but also a big brand, so it has the ability to do promotion on a national level.
They can do promotion in first-tier and second-tier cities, on social media sites like Xiao Hong Shu (Little Red Book), with videos in WeChat and other platforms, with celebrities in traditional and newer media.
On smaller Australian producers
For small brands or small wineries, the issue becomes more complicated. First, the market is shrinking, the pie is becoming smaller. And uniqueness is becoming more important.
By small, I mean first there is no recognition of your brand name. And second you lack the money for a major promotion package.
I think for many Australian and other foreign wine companies, it’s very difficult for them to make a big investment in promotion before they get any revenue, no matter what the distribution channels or events.
Also, small boutique wineries need more time, need more communication. There is less efficiency and more risk.
It’s like making wine. Big wineries have more technology and more experience, it’s rare for them to have major wine quality problems. But for small boutique wineries, there can be less stability with quality and more risk.
On a mature market within an immature market
It’s more difficult to penetrate an immature market than a mature one. A mature market usually supports more diversity.
I think big cities like Shanghai, Hangzhou and Guangzhou, the coastal areas could be better choices than a second-tier city like Zhengzhou. In this relatively immature market, these are relatively mature areas.
The market is also segmented in terms of distribution, such as selling online or in boutique retail outlets or to a restaurant chain.
So the target market is very important. That depends on price point, wine quality, even what the label looks like, especially as the gifting market is still big. There is lots to consider and all these small details will decide the market position.
On country image
Other important factors include country image. I mean, most Chinese have never been abroad, most people has never been to Australia. If you think about overall education, and people’s understanding of other parts of the world, then you realize in China the country image is always important. So a friendly country image is important.
But a country’s image is not a factor producers can control. But they can control some parts, like say the country’s wine image.
On Australia’s wine image
Australia did quite good of this because they had a whole strategy, due to the AWRI [Australian Wine Research Institute] and other entities, about marketing in China.
They successfully made the Australian wine image one of high quality. I think it’s not only about the taste of the wine, about sensory evaluation, but also promoting a specific grape variety like Shiraz, because consumers need keywords to remember. This is what Barossa did with Shiraz. They also did it with the Old Vines Shiraz, in this case combining two concepts.
If you talk about a wine having a raspberry or a mushroom taste, for many consumers, it’s not easy to grasp. But everyone can understand the idea of old vines like they can understand old trees.
So they keep promoting Shiraz, and Cabernet Shiraz, and it is still a very good topic, these keywords are still very important.
On the Chinese wine factor
We also see the effort of Chinese wine. You see the new TV series, Home of the Stars, about Ningxia wine. They released a white wine to fit the market. The cost is RMB288 [USD40] for six bottles and it is pretty good quality.
So the Chinese wines are dropping in price. The quality improved but the overall prices are less than in 2019.
So, for Australian wines, they still have very good potential in the Chinese market because they are very strong in quality and in marketing capacity. But at the same time they are really facing a changed market which means they need to first fight to retake the market share — this is a very competitive market — and they need to focus on new consumers.
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