Asia is bucking the trend of over supply. Read more about the changing taste of this diverse region.
Dated: 1 October 2006
By Malcolm Tham, Wine Resources
Asian wine consumption is set to grow 10-20 percent per annum within the next five years, with the greatest activity registered in China, India, Korea, Singapore, Taiwan, the Philippines and Malaysia. This transformation of the region into a wine hotspot bucks the global trend towards over production. However, one question remains: How does one penetrate the different markets?
 Special considerations
Asian wine markets should be considered as a heterogeneous body, because each country, to a certain extent, is a unique entity. Firstly, there are very different tax and custom systems with regard to wine imports and consumption. In fact, one can be totally lost with the myriad of tax and custom systems that exist in the different Asian countries. Secondly, different wine consumption behaviors have emerged in the region. For example, in countries like Singapore the demand for premium wines has grown. Then there are different national perspectives at looking at wines. Some countries view them as a status symbol, while others would consider them part of their newfound lifestyle. Thirdly, different industries have different structures. Since some Asian countries have an indigenous wine production industry, foreign wines will often face competition (and even unfair competition in the form of tariffs) from domestic producers.
Location advantage
The general rule is that if you are only interested in one particular market, be present directly in the market. However, many manufacturers are interested in multiple markets but are short on resources. What then is the best way to approach several countries at the same time? One way to test different markets is to work from an effective base during the initial period. When choosing a base, look for accessibility to other markets, both in terms of personal travel and logistics; ease of communication with the export base and markets; strong logistic facilities, in terms of wine storage; consumer sophistication in wine consumption, to ensure the market keeps up with changing trends; marketing test possibilities; marketing expertise; and good financial infrastructure.
Based on the above criteria, the ideal choices for an Asian base are a) Singapore and Hong Kong, or b) Kuala Lumpur and Bangkok.
Both Singapore and Hong Kong are ideal locations for starting up an Asian base, due to their excellent infrastructure and financial facilities. Singapore, for instance, has attracted more than 4,000 MNCs (multinational companies) who have set up regional headquarters on the island city; and its geographical location makes it a good choice to serve India. Meanwhile, Hong Kong has the obvious advantage of its proximity to China. However, if both giants are your target markets, Singapore is the better choice. Besides its diversities in tastes and cultures, it is also a good test bed for the other markets in the region. According to fine wine merchants, Singapore has developed a level of sophistication in appreciating fine wines which is unrivaled in Asia. In other parts of South-East Asia, Kuala Lumpur and Bangkok are both up-and-coming cities which also show good potential as Asian bases.
Country Profiles
South-East Asia
In South-East Asia, the principle growth countries are Singapore, Indonesia, Malaysia, Thailand and the Philippines. Luckily for manufacturers, all these countries have started with a low wineconsumption base. In the region, the principal drivers of growth in wine consumption are lifestyle and health. Health-conscious consumers are switching from brandy to wines. In addition, women are cropping up as an important wine market as they find wine a more acceptable alcoholic beverage than beers.
Of all the countries, Singapore has the most straightforward tax system; the other countries impose multi-tier tax systems which are fairly complicated to understand.
China
China is the largest wine market in Asia in terms of volume. It is also the largest producer. About 90 percent of the wines consumed are produced locally.
Currently, China is taking a very aggressive approach in building up its indigenous wine- production capability. It is working closely with foreign experts to produce wines and hopes to one day rival the best châteaux in France. Much to people’s surprise, it has already shown proven successes in the right direction.
To date, China’s wine consumers are generally still lacking in terms of wine knowledge. To be effective, wine sales have to be supported by trusted recommendations. However, premium wines—which are viewed as a status symbol—have some market clout.
Overall, China’s masses have a palate that favors different wine styles when compared to Western tastes. In general the Chinese prefer stronger and slightly sweeter wines. It is not uncommon to hear comments that some Chinese love to drink wine cocktails instead of wine. |
What is wine consumption like worldwide?
The global wine industry is in a state of over-production. In the EU alone, there is a reported surplus of 1.5 billion liters of wine—enough for four bottles for every EU citizen.
Other than Asia, North America is the only other hot spot, with growth slated at an average of five percent for the next five years.
Consequently, Europe seems to be in for a long-term gradual stagnation or even decline in wine consumption, while other areas will not see any significant changes. |
|
