China wine Market Analysis
China market size
In the research of institute of Fortune Quality, the average wine consumption keeps increasing. As showed below, the average consumption in 2014 will be 1.5 liter per person. That is, the total consumption will be 2024 million liter. However, the world average consumption of wine is 6 liter, so the wine industry is still on the primary period and the potential market is huge.
However, according to the National Bureau of Statistics of the People’s Republic of China, the wine volume of the past ten months in 2014 is about 937 million liter, increased by 3.51%. It is supposed to be 1830 million liter in 2014.
The gap attributes the macro effect and consumption trend. Firstly, in term of consumer structure, thegovernment spending only accounts for 10%, volume sales is 20%; Business spending and private consumption is the main consumer group.Wine is accepted by more Chinese consumer.
Secondly, in the past two years, the average price has fallen from 200-300 RMB per bottle to 80-150 RMB per bottle, which means price is on the reasonable level.
In conclusion, it can be supposed that the market size would be 2000 million liter.
Chinese wine customer behavior
The wine culture in china is comparatively week and most consumers get knowledge about wine through ads and network, so the deeper culture education is in shortage. As most of foreign products, Chinese consumers are accustomed to it. Here are some characters:
2.1 Consumers’ attitude of wine is not mature. Over half of the reach doesn’t have a whole knowledge of wine. So they can be easily misled by unreal wine knowledge which affects their consumption concept.
2.2When consumers choose wine, they will take brand as the first factor (44%); like other consumers, china consumer also take flavor (28%), price (16%), country of origin (8%), package (4%) into consideration. However, they have an outstanding feature that when their understanding of wine is limited, they believe in friends’ recommendation, so public praise is fundamental effect.
2.3In term of purchasing channel, stores are still consumers’ first choice (31%), and they prefer stores they are familiar with, in case of buying fake wine. Besides, they will not buy wine whose price is more than 10000rmb. As popular in china market, there are increasing wine agency, so it becomes the second choice (23%). Because of social activities, dealing between friends is also a channel (15%). In the end, many consumers (8%) like purchasing overseas directly.
2.4 China consumers are accustomed to wine. According to research, about 33% of consumers purchase wine for daily drink,festival (15%), party (41%).
In conclusion, the target consumers are 35-39 year-old males who focus on ads promotion and have salary above 100 thousand. Besides, they usually get information from TV and Newspaper. Apart from that, their consumption is in the restaurants whose average consumption is above 100rmb.
Chinese competitor comparison
3.1 external competitors
White spirit has far-reaching culture in china, so it is the main competitors in external environment. Many famous wine and breweries penetrating wine field through import, cooperation and joint venture (Mao Tai, Qin Dao etc.). However, their focuses are on white spirit, so the threat is far less than white spirit.
3.2 internal competitors
3.2.1 Competition situationof internal market
- National wine accounts for over 80%, so national brands are the main competitors.
- Zhang Yu and Chang Chen account for most part of the market
- Other shares are divided by national brands, import brands has no leading brand
- Castel aims at high-end import market using the network of Zhang Yu
- Denis Poetryaccounts the low-end market of retail outlet
- Fermentedby grapes, XO, VSOP cognac and other types of wine, using the powerfulmedia promotion, also occupy a certain share of the business wine
3.2.2 Import wine
- volume and sales have no distinct increase
In the long term, percentage of import wine will be increased to about 1/3 which is as same as that in America. However, in short term, the percentage may keep stable. According to data of customs, since 2012, the volume percentage sways around 25%, volume sales 30%.
- Benefit at reasonable level
Since 2005, tariff has declined to 14%: from 2005 to 2012, many New World countries cut down their tariff. However, there is no marginal benefit from tariff cutting. On the other hand, the gross profit is 30% and net margin 10%, far less than that in 2011 (80%, 30%). Besides, the price fell from 150-300rmb in 2011 to 80-150rmb in 2014.
In a word, apart from some special brands, the import wine has little crash and threat on china market.
3.2.3 National wine
- Market concentration low
The market share of the top three brands (Zhang Yu, Chang Chen, Wei Long) is less than 10%, which is less than that of America. In America, the market share of first one is 9%; that of top three is 15%.
- Average prices are below 100rmb