WINE: The Markets of Tomorrow

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.