The Wine Value Chain in China

Consumers, Marketing and the Wider World

Roberta Capitello, Steve Charters, David Menival

• Publisher: Chandos Publishing
• Year: 2016
• ISBN:
  9780081007600
• Topic: Business
• Subtopic: Management
• Index: Business

The Wine Value Chain in China: Global Dynamics, Marketing and Communication in the Contemporary Chinese Wine Market presents information on China and its role as a relevant player in the international wine industry, both as supplier and consumer. The book provides new insights into the global dynamics of the wine industry, expanding the knowledge of academics, practitioners, and students on the growing demand for wine in China.

Special attention is paid to the supply and demand changes, their impacts on Western wine supply chains, and new market opportunities. The book contributes the latest research findings to increase the understanding of the context of wine consumption in China and the most suitable marketing and communication approaches. The book aims to provide academics with the most adequate methodological tools to study a novice market, with both conceptual and empirical chapters included.

The book covers a range of topics, including the behavior of Chinese consumers and their attitudes towards wine, the cultural context of wine in China, the characteristics of the wine supply chain in China and its development, the impact of China on Western wine supply chains, wine marketing and communication in China, wine branding in China, including counterfeiting, wine education in China, the links between wine, food, luxury, and Western products in China, and wine tourism.

• Collects and collates research on wine consumer behavior in China
• Presents an outstanding scholarly look at wine marketing studies
• Offers a whole market perspective that focuses on demand
• Provide academics, practitioners, and students with new investigation tools in marketing and communication that are in-line with the characteristics of this market
• Draw conclusions relevant to other emerging markets, detailing why China is different from other such markets

Part I

Context

Outline

Chapter 1 Introduction

Chapter 2 Some Fundamental Facts about the Wine Market in China

Chapter 3 The Regulatory Environment for Wine in China

Chapter 1

Introduction

S. Charters¹, J. Yuan², R. Capitello³ and D. Menival¹, ¹ESC Dijon/Burgundy School of Business, Dijon, France, ²Texas Tech University, Lubbock, TX, United States, ³University of Verona, Verona, Italy

The Rise of Wine in China

For almost 20 years now China has been touted as ‘the next big thing’ in wine; first in consumption and more recently for its production. Its potential impact has become mythologized; that is, it takes on a meaning beyond mere reality to explain otherwise hidden developments and portents. This is partly because it is a large nation and barely known within the key international centres of wine production around the world (a factor magnified by the fact that it is only in the last 30 years that it has been perceived in the West to be ‘emerging’). In addition, there is also a dearth of concrete statistical data about wine in the country (which would reduce the reliance on stories) and what does exist seems to be of uncertain accuracy. Yet the narratives that abound seem to underline its strange nature when compared to traditional wine cultures. For example, the mixing of Chateau Petrus with Sprite, the number of bottles of Chateau Lafite sold in the country each year well in excess of local production, or the fact that some of its wine regions are so cold in winter that the vine trunks need to be buried.

We term these stories ‘myths’ not because they are not true (they probably all are) but because they represent an important representation of the ‘otherness’ of China for the traditional cultural shapers of wine production and consumption. Consequently it is because of this mythology that we consider the time is ripe for a book that examines the engagement of China and the Chinese with wine. There has already been a growing amount of research into the wine market in China (see below), and rather less about wine production in the country, but these studies need to be moved on further so that academics studying the engagement of the Chinese with wine and practitioners seeking to deal effectively with the country have a clearer view about it and less reliance on stories – however quaint they may seem.¹

This work focuses on mainland China although Hong Kong, as a major point of entry and a more ‘Westernized’ market (thus easier for Europeans and Anglo-Saxons to deal with) is inevitably significant and addressed at various stages throughout. The greater Chinese area – including Taiwan and even Singapore – is significant as part of the overall impact of the culture on the changing wine markets of east Asia, but their inclusion would have made an already complex subject even more difficult, and so have been excluded.

What does Existing Research Tell Us about China?

Literature (i.e., articles written in English language and published in referred academic journals) based on research studies developed explicitly and empirically to address Chinese wine consumption/consumers began to emerge after 2005, when China became the world’s fastest-growing wine market. The rapid development of wine consumption in China can be attributed to many reasons, but is primarily due to ever-increasing household incomes and a change of lifestyle by the middle class. Interestingly, in an effort to preserve national stocks of rice for the production of food rather than alcohol, government policies and campaigns have been promoting wine-drinking, contributing in part to the upsurge of wine sales and wine consumption (Mitry et al., 2009; Moslares and Ubeda, 2010). With media attention to wine spreading on the rise, an increase in wine consumption in general and higher demand for complex and high-quality wine, academic studies on the Chinese wine market built on empirical evidence have been slowly but steadily rising (see Table 1.1).

Table 1.1

A Summary of Empirical Studies on Chinese Wine Consumers

Author(s)	Date	Methodology	Sample size	Major findings
Balestrini and Gamble	2006	Interviewer-administered (structured) questionnaire in Shanghai, China	100	Quality was ranked most influential, followed by country-of-origin (COO), in wine purchasing decision by Chinese wine consumers. COO is given more credit when wine buyers purchase wine for special occasions rather than private consumption.
Liu and Murphy	2007	In-depth interviews and a semi-structured questionnaire of open-ended questions in Guangzhou, China	15	For Chinese consumers, wine means red wine. Red wine’s health aspect and good social image were important attributes by the subjects. Chinese consumers drank red wine on special occasions. Chinese consumers had little wine knowledge and purchased foreign red wine on important occasions.
Heathcote and Barlow	2007	Wine sensory tasting of nine wines and self-completion questionnaire in Shanghai, China and Melbourne, Australia	129	This preliminary investigation into the taste preferences of Chinese wine consumers for red wine, and cross-cultural differences between the wine markets in Shanghai and Melbourne found that Chinese in Shanghai are less likely to consume wine at home with a meal.
Hu, Li, Xie, and Zhou	2008	Questionnaire at shopping malls in Shanghai and Hangzhou, China	148	COO effect is generally important when Chinese consumers evaluate wine. COO is more important than brand as an indicator of wine quality when Chinese consumers evaluate wine for special occasions, gift-giving and in consuming in public.
Lee, Huang, Rozelle. and Sumner	2009	Direct observation and survey in supermarkets in eight Chinese cities	61	Chinese consumers buy more red wine than white wine and have chosen sweet wine or wine with very high alcohol content. A lack of knowledge about premium wine existed in Chinese consumers.
Yu, Sun, Goodman, Chen and Ma	2009	Questionnaire from wine consumers (“now” market) and from university students (market coming “on-line”) in Beijing	230	Subjects intend to pay a low price for “daily use” wine and higher prices for wine intended for gift-giving. Chinese wines were the top choice in terms of COO influence. The four most influential wine purchase attributes are to have tasted the wine previously, origin, brand name and a recommendation.
			122
Li, Jia, Taylor, Bruwer and Li	2011	Highly-structured questionnaire from 54 universities in 28 provinces in China	414	Most Chinese young adults lack even the most basic wine knowledge and prefer red wine to white wine. They like to drink wine at home. They drink wine for social communication or for health. Females are more knowledgeable about wine and express more positive interest in future wine-drinking than males.
Somogyi, Li, Johnson, Bruwer and Bastian	2011	Four focus groups with ethnic Chinese wine consumers residing in the Adelaide area, Australia	36	Chinese wine consumers are influenced by face and status. They believed red wine was particularly good for their health. Wine consumers are choosing to drink wine (or mix it with soft drinks) due to its lower alcohol content than other alcoholic beverages.
Camillo	2012	Online survey in over 30 major cities in China	438	Chinese consumers perceive all good wine to be red and when consumed or given or received as a gift, it causes mianzi (face). Taste, COO, and quality associated with brand recognition ranked highest. Wine, particularly red wine, is a healthy beverage.
Williamson, Robichaud and Francis	2012	A set of 14 Australian and international wines assessed for hedonic liking by consumers in Beijing, Shanghai and Guangzhou	310	Two consumer clusters (80% of the consumers) preferred sweeter wines and had low acceptance to wines with strong acidity. The third cluster liked wines with higher purple colour, and had a lower liking score for wines with higher astringency. Years of consumption of wine are linked to preferences.
Muhammad, Leister, McPhail and Chen	2013	Monthly China Customs data on wine imports (quantities, values and prices) from the World Trade Atlas database	Jan. 2002 to Dec. 2011	A greater preference is found for wine from traditional Old World suppliers, Italy and France. Future imports will likely come from the largest and oldest wine-producing counties, France and Italy. The growing consumption of French and Italian wine is likely due to limited wine knowledge.
Lin and Tavoletti	2013	Survey of wine consumers in Beijing, China	779	Respondents drink wine because of social intercourse needs, mental relaxation and improvement of life and taste. Respondents are most likely to drink wine in restaurants, at home, in karaoke and bars. Most participants would choose to buy imported wine as a gift. Respondents receive information about wine via internet, TV and magazines.
Liu, McCarthy, Chen, Guo and Song	2014	Online survey on Chinese wine consumers in various region...

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• List of Figures
• List of Tables
• List of Contributors
• About the Editors
• About the Contributors
• Acknowledgments
• Part I: Context
• Part II: Consumers
• Part III: Markets and Distribution
• Part IV: China in the Wider World of Wine
• Part V: Final Reflections
• Index