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chinese wine chain analysis

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Jing WU

on 1 March 2013

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Transcript of chinese wine chain analysis

agrochemical
bottle, label
cap, box 1st Sector 2nd Sector 3rd Sector Chinese wine chain analysis Production Importation Exportation Distribution Consumption --Chinese wine chain analysis Cheng Chang
Audrey Denis
Javiera Velozo
Marie-Paule Wilmotte
Jing Wu Chinese wine market & industry History of production General information 9.6 million square km, 1.3 billion people Disposable income: 24 thousand RMB
(per year) 3.8 thousand USD GDP: 47 trillion RMB
7.5 trillion USD 1) Over 2000 years 2) In 1892, CHANGYU wine company 3) Before 2005, no rules that wine has to be
made from grapes 4) In 2011, 74,000 ha, 13 million hl 5) 6th largest wine producing country Surface Evolution 2007/2011 2007 to 2011: the world vineyard area dropped by 10%
the chinese vineyard area increased by 2% from 416mha to 560mha, 4th largest country Wine production Evolution 2007/2011 the world production was stable
the chinese production increased by 4% From 1.25 to 1.3 million hl Simple structure Surface:
Red : white = 7:3 The proportion of red wine volume decreased Gross industrial output value:
31 billion RMB (5 billion USD) Producers More than 500 wine companies 285 companies whose wine business income is above 20 million RMB (3.2 million USD)per year The top 5 companies The new stars The top 30 wine companies produce 45% of wine in China High quality, high price Favorable soil & climate Winning the awards Company types By owner: state-owned, private-owned, overseas-funded, joint venture By production mode: Planting vines Winemaking Bottling Selling Grapes Wine Case Winemaking Bottling Selling Buying grapes Wine Case Bottling Selling Buying wines Case Risk Input Varieties & wines Independent Dependent land, labor
energy, water clone
rootstock
yeast
barrel Shandong, Jilin, Henan
TOP 3 producing provinces Beijing, Shanghai, Guangdong TOP 3 consuming provinces Marketing growth Selling wine equipment
knowledge
wine additives strength weakness
National Distribution Networks Online Stores New distribution trends Domestic Wine per 750ml Imported Wine per 750ml Price evolution On-trade Off-trade Channel Distribution (Imported wine) Source: USDA 2012 Distribution Channels Importers Consumers Retailers Domestic Distribution System Various
Distributors
Wholesalers Agents Channel Distribution (All wine) Average price 21 RMB +Taxes(VAT+CTR) Channel Margin 40%-50% Average retail price
43.2RMB-46.3 RMB Producer profit 13% Sources by volume: 30% 19,200 hl
by value: 227% 22.28 million USD 85% of volume sells in bottle: 94% of the value Volume and value Source : suddefrance from Comtrade Main export destinations By volume By value A promising future The small percentage of Chinese wines that are exported are wines of high quality Winemaking Viticulture grapevines agrochemicals land
water
energy
labor equipment
knowledge
finance bottles labels boxes wine additives caps oak products corks Conflicts between cultivators and wineries From 2009 to 2011 10% of volume sells in bulk : 1% of the value COFCO export business represents approximately 40 % of China’s total wine export

Wines are exported to 28 countries and regions since 2005

Changyu Cabernet Gernischt can be found in the British grocer “Waitrose”(9.9 pounds), it is also served in the first class cabins of Germany's  Lufthansa Airlines. Main players:
COFCO & Changyu Source : Agriculture and Agri-food Canada, 2011 Still low BUT huge market potential: Wine Consumption Source : USDA Sep-2012 Total Chinese population Chinese population aged 18-50 Urban 18-50 high income class 1.39% Urban 18-50 upper middle class 2% Urban 18-50 middle class 23% Urban population 18-50 wine drinkers Salaries Segmentations Source : Bacchus 2008 Source : Bacchus 2008 Choice Factors Festivals Business dinners Source: Euromonitor international (From el mercado del vino en china, ICEX) Red wines correspond to more than 2/3 of sales
Whites wines sales make up approximately 20% Preference Purchase Motivation Imported wines are for the high-end market.
It is impossible for imported wines to compete with Chinese wines on price.
≈20% of the market is occupied by imported wines.
In 2015, the market share of imported wines is expected to be approximately 30% to 45%. Market Share Wine Importation USA 4.84% France 47.48% Australia 12.73% Chile 7.83% Spain 10.04% Italy 7.28% >1% 36.37% 5.45% 9.18% 6.73% 33.03% By volume General context Ranking 7th largest importer Increased at a far slower pace in 2012 France plays the most important role Bottled wine Bulk wine The power of new media The combination of “Cellar” & “Gourmet” Strengthen cold storage and refrigerated transport network Major concern of domestic wine production & marketing: Conclusion Opportunities for
the exporters Reduction of dependence on imports Enforcement of regulations Establishment of "AOC concept" Lower taxes: More mature market 50 to 250million consumer growth Source mise en place d'une clientèle sur le marché chinois 2007 France Strategies Best image and positioning of wine at a high price Australia Chile Large number of professionals in the hotel and
restaurant sector that favor the introduction of its
products. Spain Promotional policies, FTA since 2006 (2015 tax= 0%) Italy Cheapest price and in bulk Extensive network of Italian restaurants in
the country are a good channel to enter Consumption Occasions By volume By value Importation pathway Geographic
On the coast, big cities
Northern and Southern China

Social and demographic
not everyone can afford wine
20 to 50 year-olds (legal age for purchase: 18)
More and more women SEGMENTATION Beijing Shanghai Guangzhou In 2011 Total wine consumption: 14 million hl Wine consumption (par capita) 1 liter par capita http://www.stats.gov.cn/
http://www.prweb.com/releases/china-grape-wine-industry/analysis-2014-forecasts/prweb10264858.htm
http://www.oiv.int/oiv/info/frstatoivextracts
China 12th five-year plan
BOYCE Jim, A look at the wine industry of China, Wine Business International, August 2011.
CATCHPOLE, Andrew The chinese take interest in they own market, Wine Business International, May 2012.
CHANTEREAU Grégory – Comment réussir ses exportations de vin en Chine – 2011
BOBRIE François – Bacchus 2008 – Chapitre 13 Le vin en Chine – 2007
España exportación e inversiones, ICEX, El mercado del vino en China, 2012.
Redfern Associates – China Wine Market, Sector overwien 2010 - May 2010
http://bordeaux.cci.fr/Profils/Dalian-Wine-Dine-Festival/Le-marche-du-Vin-en-Chine
UBIFRANCE – Le marché des vins en Chine (hors Hong-Kong) – 2012
Su Rui, Troen Marcia, Halstead Richard, Miao Jiajia – Wine Intelligence – Market Watch China Vol. 7 – February 2013
Marketline – Industry profile – Wine in China – February 2012
Wine Intelligence – Fact sheet – The Chinese wine market, the great red hope? – May 2010
New Zealand Trade and Enterprise – Market profile for wine in China
Wine intelligence- White paper VINISUD- Who will be the winners in China’s “Wine Market 2.0”? : Opportunities for Mediterranean wines in the Chinese market –February 2012. (2.6 euro) (5.3 euro-5.7euro) Regional
producer Portugal, Spain USA, France cork
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