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China symposium, Cultural bridge building for successful business relationships
- 1. CULTURAL BRIDGE BUILDING FOR SUCCESSFUL BUSINESS RELATIONSHIPS 12 November 2013 www.heinonwine.com
- 2. COMPONENTS OF PRESENTATION • Traditional wine markets • Developing wine markets • The importance of BRICS • Why China? • The Chinese Challenge & Our Approach o Chinese Wine Market o Culture – traditions & tastes o Distribution o Marketing opportunities • Conclusion – bridging the cultural divide www.heinonwine.com
- 3. TRADITIONAL WINE MARKET What is happening in our traditional wine markets? www.heinonwine.com
- 4. TRADITIONAL WINE MARKET What is happening in our traditional wine markets*? Bulk wine exports 2006 – 2012 (litres) * United Kingdom, Germany, Sweden, Denmark, Belgium & The Netherlands www.heinonwine.com
- 5. TRADITIONAL WINE MARKET What is happening in our traditional wine markets*? Bottled wine exports 2006 – 2012 (12 x 750ml packs) * United Kingdom, Germany, Sweden, Denmark, Belgium & The Netherlands www.heinonwine.com
- 6. DEVELOPING WINE MARKETS What is happening in the developing countries? www.heinonwine.com
- 7. DO THE BRICS STACK UP? 2012: SA wine exports to Eastern Europe: 435 477 x 12 2012: SA wine exports to Far East: 912 736 x 12 2012: SA wine exports to Middle East: 430 785 x 12 2012: SA wine exports to South America: 80 477 x 12 www.heinonwine.com
- 8. DO THE BRICS STACK UP? SA wine exported from Jan - Dec 2012: China Far East Litres Total 12-Packs Litres 12-Packs 6045390 671710 8214626 912736 China accounts for 73.6% of all SA wine exports to the Far East www.heinonwine.com
- 9. DO THE BRICS STACK UP? Russia per capita consumption: 7.14L China per capita consumption: 1.31L India per capita consumption: 9ml Brazil per capita consumption: 2L www.heinonwine.com
- 12. WHY CHINA? Population statistics (2012) China 1 351 000 000 UK 63 223 000 USA 313 900 000 Europe 739 200 000 Earth 7 046 000 000 China as a percentage of the world's population 19.17% www.heinonwine.com
- 13. WHY CHINA? Wine Consumption per capita in China (litres) 2011 0.5 2012 0.9 Growth of 0.4 litre per year • If wine consumption in China grows with 0.4 litre per year: • The growth potential is 320 000 000 bottles for the next year • 20% of total wine consumption in China is imported wine = 64 000 000 bottles of imported wine • 2% of the imported wines to China comes from South Africa = 1 280 000 bottles of wine from South Africa www.heinonwine.com 2013 1.31
- 14. OVERVIEW OF CHINA • 1 351 000 000 people • Massive shift of rural to urban populations (200 cities with more than 1 million people, 25 greater than 5 million) • 23 provinces, 5 autonomous regions, 4 municipalities, and 2 Special Administrative Regions • All power within People’s Republic of China - three bodies: Communist Party of China State Council People’s Liberation Army www.heinonwine.com
- 15. OVERVIEW OF CHINA WINE INDUSTRY www.heinonwine.com
- 16. OVERVIEW OF CHINA FOREIGN INVESTMENTS www.heinonwine.com
- 17. OVERVIEW OF CHINA FOREIGN INVESTMENTS Bordeaux domains owned by Chinese investors at the end of August, 2013, as listed by BORDEAUX SUPERIEUR: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Château Vieux-Brondeau Château Branda Cadillac-en-Fronsadais Château Baby Château Blanchet Château de Lugagnac (Pellegrue) Château la Bourguette Château Thébot Château de Cugat Château Latour Laguens Château Bertranon Château La Dominante www.heinonwine.com
- 18. CHINA OVERVIEW SOUTH AFRICAN INVESTMENT www.heinonwine.com
- 19. CHINA OVERVIEW SOUTH AFRICAN INVESTMENT WINE EXPORTS TO CHINA (12x750ml packs) 2011 2012 Total SA Wine 592244 671710 Total La Motte + Leopard's Leap + L'Huguenot 127600 158400 La Motte, Leopard's Leap & L'Huguenot as % of SA wine exported to China 21.55% 23.58% www.heinonwine.com
- 21. THE CHINESE WINE MARKET www.heinonwine.com
- 22. THE CHINESE WINE MARKET Drinking Patterns Growth of alcoholic beverages in China in 2011 www.heinonwine.com
- 23. THE CHINESE WINE MARKET Wine Production vs Wine Consumption • • • • China’s consumption in 2009 was 116 million cases 2011 consumption was 156 million cases = 5% of world consumption and exceeds global growth Deficit between consumption and production continues to grow www.heinonwine.com
- 24. THE CHINESE WINE MARKET The importance of Festivals www.heinonwine.com
- 25. THE CHINESE WINE MARKET Niche is good www.heinonwine.com
- 26. THE CHINESE WINE MARKET Trends www.heinonwine.com
- 27. THE CHINESE WINE MARKET Also keep in mind • M a ny g o o d o p t i o n s o u t s i d e t h e B i g 4 – B e i j i n g , S h a n g h a i , G u a n g z h o u a n d S h e n z h e n • E x p l o r e s e c o n d t i e r C i t i e s s u c h a s : D a l i a n , N a n j i n g , Wu h a n , C h o n g qi n g • H i g h to u r is m – X i ’ a n • H a n g z h o u – C a p e To w n ’ s s i s te r c i t y • 2 holidays account for ≈ 60% of annual wine sales • Fa m i l y r e u n i o n s a r e v e r y i m p o r t a n t • G i f t B ox e s a n d a c c e s s o r i e s – v e r y i m p o r t a n t • C o m p et i t io n w i t h B r a n d y, C o g n a c , B a i j i u www.heinonwine.com
- 28. THE CHINESE WINE MARKET Percentage of sales via main channels www.heinonwine.com
- 29. THE CHINESE WINE MARKET Consumption www.heinonwine.com
- 30. CULTURE – TRADITIONS & TASTES The Chinese Consumer What motives the Chinese consumer to drink wine? www.heinonwine.com
- 31. CULTURE – TRADITIONS & TASTES www.heinonwine.com
- 32. CULTURE – TRADITIONS & TASTES PALATE PREFERENCES • Coastal regions – seafood is popular. Style of wine fresh and light, accessible. • Southern regions – seafood still popular, also spicy dishes. Style of wine sweetish and fresh. • Northern region – more red meat and spicy dishes. Style of wine more full bodied and dry. www.heinonwine.com
- 33. BEST-SELLING POTATO CHIP FLAVOURS IN CHINA 10 th French Chicken 9 th Cucumber 8 th Mexican Tomato Chicken 7 th Blue Berr y 6 th Lemon Tea 5 th Hot and Sour Fish Soup 4 th Little Tomato 3 rd Italian Red Meat 2 nd Numb and Spicy Hot Pot 1 st American Classic Flavour www.heinonwine.com
- 34. TASTE CUSTOMIZATION Fruit flavoured Oreos for China The much loved traditional Oreo cookie Growth: 60% per year Since changing to fruit flavours 5 years ago www.heinonwine.com
- 35. CULTURE – TRADITIONS & TASTES PERCEPTION OF PACKAGING www.heinonwine.com
- 38. PACKAGING CUSTOMISATION “CHINESE-FRIENDLY” HIGH END LABELS Xu Lei for 2008 Mouton Lafite with 8 for 2008 www.heinonwine.com
- 39. CULTURE – TRADITIONS & TASTES SOCIAL PRACTICES www.heinonwine.com
- 40. CULTURE – TRADITIONS BUSINESS ETIQUETTE www.heinonwine.com
- 43. DISTRIBUTION WHAT WE HAVE DONE 3 Channels of Distribution 1. Agent 2. Gifting 3. Joint Venture www.heinonwine.com
- 44. DISTRIBUTION WHAT WE HAVE DONE - AGENT With our Agent, Aussino Fine Wines Take time to identify your agent • • Build a relationship Take time with exclusive agreements • • Be the point of difference • • • Support! Focus on your strengths Brand building is very important www.heinonwine.com
- 45. DISTRIBUTION WHAT WE HAVE DONE - CORPORATE GIFTING www.heinonwine.com
- 46. DISTRIBUTION WHAT WE HAVE DONE – JOINT VENTURE Joint Venture with Perfect China • JV’s are not always straight-forward • • • JV’s can be very rewarding Take care when selecting your partner Spend time and effort building relationships and support their initiatives. www.heinonwine.com
- 47. DISTRIBUTION WHAT WE HAVE DONE In October 2011 we shipped the largest single wine order shipment from SA: 106 containers or 1.3 million bottles to start our JV. www.heinonwine.com
- 48. MARKETING OPPORTUNITIES HONG KONG – A GOOD ASIAN OPTION www.heinonwine.com
- 50. MARKETING OPPORTUNITIES FREE TRADE AGREEMENTS www.heinonwine.com
- 51. MARKETING OPPORTUNITIES CHINA’S CURRENT FTA’S MACAU 2003 HONG KONG 2002 NIGER 2005 THAILAND 2003 PAKISTAN 2006 CHINA SINGAPORE 2008 NEW ZEALAND 2008 (wine tax reduced to zero in 2012) PERU 2008 COSTA RICA 2010 CHILE 2006 (wine tax reducing to zero in 2015) www.heinonwine.com
- 52. MARKETING OPPORTUNITIES E-COMMERCE Food & Beverage 4% Maternity/Child care 4% Personal care 5% Others 20% Jewellery 6% Clothing 17% Electronics 44% • Total E–Commerce: RMB 252.8 billion (€ 27.5 billion) of which food and beverage accounts for RMB 10.1 billion (€ 1.1 billion) (2009 figures) • *Internet users (netizens) in China have grown from 22 million in 2000 to 500 million in 2012 • CHINESE CONSUMERS TRUST THE INTERNET www.heinonwine.com
- 53. MARKETING OPPORTUNITIES SOCIAL MEDIA Largest search engine is “ baidu” Facebook → RenRen Twitter → Sina Weibo Youtube → Tudou or Youku www.heinonwine.com
- 55. MARKETING OPPORTUNITIES CELEBRIT Y ENDORSEMENTS www.heinonwine.com
- 56. MARKETING OPPORTUNITIES CELEBRIT Y ENDORSEMENT - WHAT WE HAVE DONE www.heinonwine.com
- 57. IN CONCLUSION BRIDGING THE CULTURAL DIVIDE www.heinonwine.com
- 58. BRIDGING THE CULTURAL DIVIDE • Learn a few words Chinese • Respect their culture • Be sensitive to customs • Use familiar flavour references • Use familiar wine reference - 100 point scheme • Allow enough photo opportunities… www.heinonwine.com
- 59. KEY RECOMMENDATIONS • Look beyond the big cities www.heinonwine.com
- 61. KEY RECOMMENDATIONS • Educate consumers through ambassadors and online and visit the market regularly • Coordinate a specific marketing campaign direct to trade and industry • Point of sale helps showcase your image • Highlight your own cultural aspects and history • Do not only sell to an agency – help them to sell through to customer. www.heinonwine.com