Sunday, March 31, 2013

Why the Chinese wine market is like Wi-Fi, TomTom and a precocious teenager

Bordeaux bottles on poster at the Chengdu Wine Fair 2013

"China isn't easy"; "It's a tough market..."; "Taking a long time to get really going"; "China hasn't developed a wine culture yet..."

Over the last few weeks, in France, the US and at ProWein and the Chengdu wine exhibition, I have heard a number of these comments from frustrated foreigners who are finding the route to oriental prosperity less of a silk road than one pitted with potholes.

I feel their pain. It took a long time to finalise distribution of our own le Grand Noir wines, there have been complications and sales have not lived up to hopes/ expectations/ importer's promises.

But, to take a more level-headed, philosophical view, I now think that we westerners are viewing the Chinese wine market in pretty much the way that I view my GPS/SatNav and Wi-Fi. I get really frustrated when the little Garmin unit in my car and the inhuman voice with the execrable French accent gets it wrong and fails to take me to the desired address by the most direct route. I get similarly, hair-tearingly annoyed when my iPhone or laptop cannot get or hold a signal.

When I have these tantrums, I am behaving like a spoiled child (or B-list celebrity) who wants it all and wants it right now. How long do you think we've had GPS?

Read this from the TomTom website:

Our first stand-alone portable navigation device (PND), the TomTom GO, was introduced in March 2004 and marked a turning point in TomTom's story. The TomTom GO met a need for a portable fit-for-purpose navigation device that was simple to use, affordable and worked better than any other navigation solution on the market. The TomTom GO effectively defined a new category of consumer electronics; the PND.
As demand grew, TomTom underwent a phase of extremely rapid growth with 250,000 PNDs sold in 2004 rising to 1.7 million in 2005
2005, incidentally, was the year Garmin launched its StreetPilot i-Series.
And how long have we had Wi-Fi?
In August 1999, six companies—Intersil, 3Com, Nokia, Aironet (since purchased by Cisco), Symbol and Lucent (which has since spun off its components division to form Agere Systems)—got together to create the Wireless Ethernet Compatibility Alliance (WECA).... Branding consultants suggested a number of names, including “FlankSpeed” and “DragonFly”. But the clear winner was “Wi-Fi”. It sounded a bit like hi-fi, and consumers were used to the idea that a CD player from one company would work with an amplifier from another. So Wi-Fi it was. (The idea that this stood for “wireless fidelity” was dreamed up later.)
The technology had been standardised; it had a name; now Wi-Fi needed a market champion, and it found one in Apple, a computer-maker renowned for innovation. The company told Lucent that, if it could make an adapter for under $100, Apple would incorporate a Wi-Fi slot into all its laptops. Lucent delivered, and in July 1999 Apple introduced Wi-Fi as an option on its new iBook computers, under the brand name AirPort. “And that completely changed the map for wireless networking,” says Greg Raleigh of Airgo, a wireless start-up based in Palo Alto, California. Other computer-makers quickly followed suit. Wi-Fi caught on with consumers just as corporate technology spending dried up in 2001A rose by any other name...
(from the Economist Technology Quarterly Report 2004)

Getting frustrated with GPS and Wi-Fi is a bit like being annoyed that a precocious teenager doesn't have all the knowledge and skills of a mature adult.

Which brings me back to China. 
This is a very, very young market: in 2003, wine consumption was just 0.2 litres per person. Today the figure is 1.9 litres, and it is estimated that some 170m Chinese now drink wine, at least occasionally. 

Compare this with the US. Only 100m Americans are currently classified as wine drinkers: 44% of the 253m adult population. The 2012 Wine Market Council report that includes this information also reveals that 25% of the US population is responsible for 84% of all wine consumption. In other words, three and a half decades after the Judgment of Paris tastings and after the expenditure of countless millions of dollars by generic bodies and producers from across the globe, not forgetting the entire US wine industry, 56% of Americans still drink no wine at all, and a further 19% consume very little of it. 

If that's all we've been able to achieve in the US, maybe it's a little premature to be getting impatient with China.

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