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When champagne was originally introduced to the Chinese market in 2006, it grew at a gradual pace. Imports increased from 300 000 bottles in the first year to 1 300 000 bottles by 2012 making the country the 12th largest export market for the festive drink at that time. Moreover, according to a recent report, the period between 2010 and 2015 witnessed a 40.5% increase in the total volume imported. Growth, however, is not predicted to last and has slumped somewhat since 2012. Indeed, the volume of champagne imported actually declined by 2.5% between 2014 and 2015. This trend is expected to continue too, the forecast from 2015 and 2020 for the total volume of champagne imported is meant to decrease by 9.3%. The champagne industry in China is suffering.
Weakness of the Champagne Industry in China
Through an analysis of various Chinese traditions and Chinese consumer preferences, this article will explore the factors that have stunted the expansion of the Chinese champagne market. Equally, it will also underline trends that must be exploited to regenerate growth.
The unique flavor of champagne is not popular among Chinese consumers. Not only do they find it hard to get used to the mineral and tart flavor, but the bubbles equally repel them. Indeed, a champagne master, Vance Yang, at Le Sun Chine in Shanghai noted that ‘Chinese people do not like the acidic taste of champagne. They also do not like wine with bubbles in it’. Nevertheless, Wang Wei, director of the China Champagne Industry Committee, recognized that it was appreciated by those ‘influenced by western culture and know how to drink’. It is clear, therefore, that education and exposure are vital to teaching consumers how to appreciate a beverage that is foreign and unique to their culture.
In Europe and other Western countries, champagne is drunk to celebrate or as an aperitif before a meal., This traditional European association with celebration has not been established in China. Accordingly, their motivations to consume champagne are different. Champagne, however, is comparably associated with luxury and status. There is evidence that champagne is viewed as a magnificent present. Equally, it is consumed in nightclubs and bars. Perhaps, this accounts for why half of the demand for champagne up until 2012 was from Shanghai.
Given champagne’s exclusive image and geographical location, it is generally very costly. This has advantages and disadvantages. On the one hand, uneducated consumers fail to distinguish between champagne and sparkling wine. As sparkling wine is more affordable, it is no surprise champagne is often neglected by the Chinese consumer. Nonetheless, with an effective market strategy, the cost and exclusivity can be useful to attract a target audience that is concerned with quality and status.
In comparison to other alcoholic beverages, champagne has relatively low alcohol content. Chinese consumers are used to strong alcoholic drinks, such as white spirits. Consequently, champagne excites them less.
Unlike other kinds of wines, champagne cannot be kept after opening. Chinese consumers, however, seldom drink a whole bottle of wine at once. Thus, they prefer wine that can be stored and kept.
Target customers and market orientation
Wang Wei summarized correctly and concisely when he stated that the Chinese consumers of champagne are ‘those who have a passion for luxury goods as well as those young people who are influenced by western culture and know how to drink’. Consumers are, therefore, educated in western culture, have ample disposable income and drink champagne for the two purposes of status and pleasure. Any market strategy must exploit these traits.
Possible Promotion Strategy
In the following passage, this article will present a possible strategy to expand and grow the champagne market in China. Based on the marketing theory of 4Ps.
The bottles should be designed traditionally in accordance with those from the Champagne region in France in order to exude sophistication and status.
There is fierce competition in the wine market. Champagne is relatively less competitive than other kinds of wines because of its high price and premium quality. Equally, however, it should not lose out to low price competition from sparkling wine. Product-different Pricing, therefore, could be a solution. Instead of adjusting prices, champagnes should be divided into low, middle and top grades. Each grade with its own price range. This would cater to a broad spectrum of society and indicate directly to uneducated consumers that there are a variety of different prices. Moreover, this would not damage the premium status of top champagnes.
Based on market orientation, champagne has a narrow customer base. Selling at prominent and affluent cities, such as Beijing and Shanghai, at the beginning would be wise. Sales in medium cities and small cities would be far harder to induce without sufficient and suitable marketing to educate more of Chinese society. Distribution channels are another factor to be taken into consideration. Champagne should be offered to hotels, bars, and nightclubs for targeted customers. High-end wine stores and perhaps even high-end supermarkets such as Olé or City Super would also be appropriate.
The best way to target Chinese customers is online. In May 2016 there were more than 721 billion of Chinese internet users. Furthermore, in China’s 60 largest cities, citizens spend 70% of their leisure time online, whilst one in five Chinese consumers aged 18 to 44 will not buy anything without searching for information on the web. Consequently, an online campaign is necessary. In conjunction, tasting events should be organized to promote the quality and history of the product. Discounts and free trial drinks are other tactics that might spread awareness and exposure to the brand.
In conclusion, the champagne market does not lend itself directly to many aspects of Chinese culture or Chinese consumer preferences. This probably accounts for the stagnation in the imports of champagne to China. Yet, there is a narrow customer base that could be targeted to regenerate the market. By Adopting, the strategies listed above the market may grow. Moreover, the increased education about the product will help broaden the market for the future.