We have chosen red wine, there are some reasons that we consider it as a leisure commodity. As all of us know, red wine is not a necessity, people can enjoy during their meals, teatime or happy hour. For those rich people, a high-end red wine can even represent their status and they enjoy to social with their family and friends with a bottle of red wine during free time.
Red wine is becoming more and more popular in China nowadays, no matter in leisure, entertainment or business sectors. But the Chinese know only few well-known brands in Europe, the market is still in a developing process, in order to have a larger market, Chinese should lead more high-end brands into the market so that people can have more choices.
Furthermore, the prospect of the red wine industry is brilliant, as the disposal income and purchasing power of Chinese rises a lot leading to an increase in demand of those high-end brands. Becoming the world’s largest import market and largest consumption of red wine are not difficult tasks for China.
Demand side Factor of Red Wine
Chinese purchasing power increase significantly
China’s economy keeps booming and consumers’ purchasing power increase from $4500 in 2000 to $11440 in 2011. Wine is a luxury good, so when people’s disposable income increase, the demand for red wine also increase according to income elasticity demand. In 2012, China has become the largest import country of the Bordeaux red wine.
Red wine is a high risk, high return investment, although wine is being produced from the same vineyard, it will still be different due to the change of climate and soil, different years will produce different quality of grapes and wines and each vineyard can only produce limited fine red wine each year, the scarcity and appreciated value from years to years are the reasons why people use it as a investment tool. Investment is another factor that push up the demand a lot. According to the survey, more than 55% of the china billionaires want to invest in vineyards.
Cultural and social factor
Drinking behavior in China
Alcohol has been existing in our country for over 5000 years history, people drink it very often. According to a survey, just the whole Chinese government can drink as much as 1429 tons a year! With more people know about wine, from 2005-2009, Chinese’s consumption of wine has already increased 104% resulting 11.56billion bottle of wine. Although Chinese only 1.5% of the total population choose to drink the imported red wine, their consumption of alcohol is already astonishing and undisregardable.
With Chinese civilized standards enhanced and the government's promotion of wine as a healthy, people become more aware of their health. Many people believe that drinking a glass of wine a day may help to maintain a better health.
Business Social Situation
Consumption increases may also due to business and gift-giving occasions, like the Chinese New Year and the Mid-autumn Festival. A customer said, "I'm not too familiar with wine, but I know it makes a great gift." Eventually, consumers are interested in purchases because it conveys a suitable level of prestige, status and respect, all of which are important elements of Chinese culture.
A sense of high class and status
Red wine is labeled as a high-end leisure product and represent a person’s status and level. As China has more billionaires and knowledge standard has been enhanced, meanwhile, Hong Kong has lowered the taxation on wine in 2008 which letting more imported wine goes into the mainland China, therefore more and more people learn tasting and enjoy red wine.
Seeing the rapid development of red wine industry in China, we have proposed several business strategies to enter into this lucrative market.
Red Wine is usually served in upper class. So, we...