Growing Interest In “Pú Tao Jiǔ” Among Urban Chinese Spurring Wineries To Intensify Their China Expansion Strategies
China’s growing middle class has emerged over the last 20 years to be one of the world’s most closely-watched demographics, with marketers in virtually every industry keeping a keen eye on every purchasing trend they make. In more recent years, one of the industries that has benefitted the most from this sizeable group’s interest in all things foreign has been wine. Although the vast majority of Chinese are either unfamiliar with foreign wine or simply do not drink it very often (if at all), many vintners see great potential in the market, as target customers in more remote urban areas remain underserved by existing bars, liquor stores or supermarkets, and returnees who’ve traveled, worked or studied abroad often come back to China wine aficionados with a taste for wine.
Although per capita wine consumption in China remains miniscule by comparison, in China’s major cities it is becoming a more popular beverage, particularly in business or family settings, and in recent auctions of fine wine mainland Chinese buyers have increased exponentially, gaining notoriety among seasoned wine investors as intense bidders (and avid drinkers). Trying to maximize their appeal in China while reaching new markets, wineries outside China are working overtime to get their products to the mainland market while promoting wine drinking in China and building sustained brand equity.
As most of these vintners remain completely unknown within China regardless of their size overseas, the Chinese market represents a blank slate of sorts, allowing them to brand themselves at will without the stigmas that may exist in other markets. A good example of this is American wineries, who are often shunned for their European counterparts among American wine aficionados. As the China wine trade has opened up in the last 10 or so years, vintners from California and Washington state in particular have worked to get their bottles in the hands of the emerging Chinese wine drinker, to mixed success. California’s Lodi News-Sentinel, interviewing Van Ruiten Wineries’ Kevin Sherwood, today illustrates some of the opportunities the Chinese market presents for American and other foreign wine producers:
Around 2006 [Sherwood] developed a desire to market to China. It was around the time of the Beijing Olympics that Sherwood started to sense an opportunity. “It’s just as easy to sell to China as it is to go and sell to the restaurants in San Francisco and Walnut Creek,” he said.
Sherwood said there is far more to trade with China than putting wine in a container and shipping it across the Pacific. You are almost assured it will “just sit and get ruined” on the docks if you haven’t met with people and established relationships, he said. “You can’t send anything over there you aren’t willing to lose,” he said.
Sherwood said he succeeded because he was able to find common ground by speaking to his Chinese business partners about the Van Ruiten farm and family.
“They respect the farmer,” he said. “They have farmed for thousands of years.”
He said there has been a lot of lessons learned and mistakes made on his part, but he said the process has been “absolutely worth it.”
The Van Ruiten family has been very supportive of his endeavor and provided the initial funds to get the operation up and running.
“They patted me on the back and said, ‘Go for it,'” he said.
The money vanished when the consulting group they were working with misled them, but Sherwood was determined to continue the mission and broke into the market on his own.
Sherwood said John and Ann Van Ruiten, owners of the winery, have encouraged him with their entrepreneurial spirit. They came to America after World War II and their willingness to take chances inspired him to achieve more and pursue this new marketing frontier, he said.