How to develop the Chinese champagne market ?

 

Introduction

Because in 2011, exportations of champagne towards China reached one million bottles, we can wonder what this figure means. In fact, it is at the same time a huge number of bottles for China, and compared to other markets, not so much actually. So we can wonder if the Chinese champagne market will take 50 years to grow, as it was the case in Japan for example, or if it can go faster.

 

Let’s see the situation today.

 

The situation nowadays

With a population of 1,341 billion inhabitants at the end of 2011, China in a huge country. So there are as well many rich people: 130 billionaires in dollars in 2010, and a middle class of 350 billion people, which represent a huge opportunity for the champagne market.

 

Concerning the luxury market, a survey of Crédit Lyonnais Securities Asia shows that China will be the first luxury market by 2020 or even before, and that almost the half of luxury sales (44%) should be done in China.

Moreover, luxury goods consumers have changed in China. A study of the « Colbert Committee » (a luxury brands committee) shows that there are in China now three new types of rich people:  First a new “bourgeoisie”, more educated and westernized, than the young adults with high revenues, which spend a lot, and are more individualists, and finally an urban class more educated in the biggest cities. For example in Beijing, the rich people a now more sensible to the aesthetic function of the products: they don’t buy anymore to show off, but they buy to show their good taste. In Shanghai it is also the case, and the luxury products are more related to the notions of creativity and modernism.

 

Then, Chinese people love France: France is the favorite European destination of Chinese tourists, before Italy, Switzerland, and Germany, especially because the country offers a lot of shopping opportunities. There could be 5 million Chinese tourists in France by 2015.

So as we see, all the conditions are there to have a huge Chinese champagne market.

 

However, Chinese people don’t know a lot about champagne. Mr. Han, teacher in a French business school, says that Chinese are even ignorant about the existence of Champagne. “For Chinese people champagne is mysterious. In order to encourage them to drink champagne, we should first teach them champagne’s culture” he says. They only know what the few images in the Chinese medias show about champagne, and those who know this drink’s value usually don’t know how to drink it.

A quantitative study

A quantitative study here show some intersting informations. Some questions were asked to Chinese people living in France or in China, and here are the answers :

 

Do you prefer champagne or red wine?                                                                                                               Do you like champagne?

 

 

 

 

 

 

Other answers

–          Concerning brands, only 11 persons (27 were asked) know champagne brands, and among these brands, 5 know Moët et Chandon, 2 know Taittinger, 1 Veuve Clicquot, 1 Pommery, 1 Jacquart, 1 Cattier, 1 Mercier.

–          To the questions “which brand do Chinese people drink?” 5 persons answered Moët, and 1 Mumm.

–          To the question “What should be done to encourage Chinese people to drink champagne ?”, here are the answers :

-2 Persons answered that the price should be lower (which is not possible)

-12 persons answered that there should be more advertisement and marketing campaign

-2 persons answered that the champagne’s culture should be spread in China

-2 persons answered that there should be some good champagnes tastings in China.

-1 person answered that we should encourage Chinese officials to drink champagne instead of Maotai, the traditional Chinese rice alcohol.

 

  Conculsions

We can conclude several things from this study : on one side, it is true that most Chinese people don’t know about champagne.

But then the people who know some brands usually know more about Moët.

We have to know that Moët (owned by LVMH) invest a lot in China. The brand even created a sparkling wine within China for the Chinese market, made with the champagne method, and owns vignards in China.

That is actually what the study shows: there is no secret, if the champagne brands want to enter the Chinese market faster than in Japan, there should simply invest a lot, and especially invest in marketing and advertisement, to let the Chinese people know about champagne and about their brand, exactly like Moët does.

 

We also notice that champagne has difficulties to have a place in China because of the market shares taken by red wine and strong alcohols.

 

The best strategy to adopt is to invest in communication. One solution for that is for example to do a joint venture. In fact, the French brand Castel made years ago a JV with the Chinese brand ZhangYu (张裕), during in few years, in order to let the Chinese people know about the brand. They created the wine ZhangYu Castel (张裕卡斯特), and then Castel brand could surf on the reputation made with this JV.

Mr. Han says the same: the best solution is to partner with the existing Chinese networks and brands. Because China has already its own sparkling wine brands, of which the biggest are Changyu, Weilong and Dinasty.

About communicating, one other solution is to invest on internet. In fact hundreds of millions of Chinese people buy on internet, including luxury products.

Moreover, the social networks such as Weibo and Weixin are very important for brand communication, because Chinese people spend a lot of time on these networks, and it is important for them to talk about brands and products with their community.

Invest on internet is the fastest and cheapest solution for a champagne brand to communicate and let the people know about it.

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Marketing China