Small insights in wine developments china and outlook for future.

1. China wines marketing and distribution
strategy 2011-2014

2. Here today
Xiaonan YAN Frank Meijer Henk Terol
CEO, Manager Business Marketing &
China Entrance Group Sales
Director Director

3. Roadmap for today
Selected Wine
Suppliers and
Top Wine
Products
Who’s who
Q&A
Introducing Sharing
China knowledge
Entrance
Wine
leadership
philosophy

4. Introduction of China Entrance
The privately – owned premises of the company are located in The Netherlands. China Entrance
combines the knowledge about the needs of the Chinese citizens and the passion of Top wines from the
Globe.

5. China Entrance
 China Entrance was founded in 2006 and is owned by Xiaonan Yan
 Dynamic management and reliable services to its suppliers and customers
 Nowadays:
 14 partners and 6 employees, and 3 independent advisers for growth
 One of the surprising and new wine traders in China
 Co-operations with great wine brands merchandizing and standardizing
companies in the local as well as international market

6. China Entrance
 China Entrance competitive advantage
 Quality in services
 Effective networking
 Extremely high quality products
 In numbers
 Annual turnover: > 3 million Euro
 Capacity Export: 3.000 tones of top wines per year

7. Philosophy of China Entrance
 Offering high quality products
 Creating collaborations with strictly selected suppliers
 As a result of the above  Providing qualitative service for its customers
 Enhancing wine brand name  a powerful synonym of prestige and quality of its
products and of its market in general

8. China Entrance Service Map
Proactive model for regional & local strategy
Understanding
consumers
Understanding Integrated
brand equity marketing skills
OK GOOD OUTSTANDING
Return on Innovation &
investment creativity
Collaboration
Where are we now? Where do we want to be in 6 months?

9. China Entrance Services
Quality support for retailers, wholesalers and agents
 Support areas
 Shop and management training for brand understanding, up and cross sell and support in
year planning, POP, POS and shelve communication,
 Category Management
 Online and convenience delivering support to end users
 Dbase management tool kit, b.e. data storage for dbase marketing strategies, consumer
profiling, buyers profiles,
 Support in communication, promotions and advertising
 Shelves support
 Editorial support
 Events and exhibitions
 Newsletters, Direct Marketing, Research, one to one marketing, interactive strategies,
mobile marketing, web services and online retailing, etc.

10. International strategy
 Current position  Business Goal: To grow further with new
 International customers: wine (inter)national collaborations
merchants who want to bottle and  To achieve our goals we are confident
standardize wine from every where on about the high quality services,
the globe product development and the mature
 Our international wine suppliers: experienced management team of
China Entrance
 Most important wines producers
in the top wine countries  We deliver a continual updating our
products, targeting in a high level of
 China Entrance has in a short period of activities and aiming at improving
time, in a competitive environment, a competitiveness
important position in the wine market
in China.

11. International strategy
Backed up and supported by our
expert regional/international team
Full service teams available in local/regional
market
Credibility - Reliability
From the local area
Technology
Experience
Quality
To international market
New collaborations
establishing
Win-Win strategies

12. Globally wine
developments

13. Up coming wine countries
China
Eastern Europe
India

14. Wine growth globally

15. World wine consumption

16. China

17. WHY CHINA?

18. Summary wine market China
 The wine market is a fast paced market. As every market in China, it attracts
investors from all over the world.
 90% of the wine consumed in China is produced locally.
 But Chinese wines have still a long way to go to catch up with French, Australian,
American, Italian or Chilean wines in terms of quality.
 Chinese wine is marketed as a few added value product.
 Therefore, it is impossible for imported wines to compete with Chinese wines on
the price.
 Importers actually do not want to enter in a fight over price.
 They have to find their differentiation.
 Among main producers of Chinese wines, you find these 3 brands that trust most
of the market: Dynasty, Great Wall and Changyu.
 10% of the market is reserved for imported wines. And we know what 10% of
the market in China represents.
 This is huge. And actually, this part is due to grow, Chinese producers leaving
more place to imported wines because of the evolution of the market.

19. Why China?
 China, being the most populous country in the world has huge potential as a growth
market for wine.
 In 2009, China was the second-largest economy in the world after the United States of
America (on purchasing power parity basis) although in per capita terms the country is still
lower middle-income (CIA 2010).
 It is estimated that by 2025, there will be 221 Chinese cities with a population greater than
one million, compared to only 35 cities in Europe (McKinsey & Co 2009).
 Rapid economic growth has produced a middle class with the capacity to pay for imported
foods and premium products of all types including wine. Reflecting this, now the world's
fastest growing wine consumption market.
 Wine drinking is considered a healthier alternative to spirits and somewhat trendy, with
still red wine being particularly popular.
 Young urban professionals and business people account for most wine consumed in bars
and hotels, in the main cities of Shanghai, Beijing and Guangzhou (NZTE 2009).
 The retail sector is experiencing growth, stocking a range of imported wines. In many cases
the purchase of imported wine is for special occasion gifts or to at a restaurant banquet to
impress guests.
 China and Japan together accounting for 80 percent of the total Asian market .
 China only began importing bottled wines in the last 15 years or so, and only in recent
years, have consumers begun to develop a taste and preference for particular wine types
that compliment food.

20. Import wine Asia and China in particular

21. Most important countries for China wines import

22. Country market shares of Chinese imported wine
Country Bottled Bulk
2008 2009 2008 2009
Australia 20% 21% 4% 27%
France 46% 48% 8% 5%
Italy 8% 6% 5% 0.2
New Zealand 2% 2% <0.1 <0.1
South Africa 1% 1% 2% 3%
Chile 5% 6% 50% 47%
Spain 4% 3% 7% 3%
USA 5% 6% 5% 8%
Others 9% 6% 17% 5%
Source: GTIS

23. Average price countries per bottle per country (USD/ltr)
Country 2006 2007 2008 2009
World 3.82 4.35 4.80 4.14
Chile 3.34 3.21 3.42 3.54
Italy 4.07 3.5 4.28 3.58
Australia 3.73 4.15 4.72 4.29
France 4.24 5.33 5.53 4.46
Chile 3.34 3.21 3.42 3.54
New
7.12 7.07 8.82 8.07
Zealand
Germany 3.94 4.46 5.68 4.95
United
3.19 3.64 3.82 3.34
States
Source: GTIS

24. China bulk wine imports USD

25. Import prices Comparison
Bottled Bulk
Country 2008 2009 2008 2009
Australia 4.7 4.3 1.2 0.8
France 5.5 4.4 1.2 1.4
Italy 4.2 3.6 0.8 1.0
New Zealand 8.8 8.1 n/a n/a
South Africa 3.5 3.5 n/a n/a
Chile 3.4 3.5 0.9 0.7
Spain 3.8 3.0 0.6 0.6
USA 3.8 3.3 1.0 1.2
World 4.8 4.1 0.8 0.8

26. China sparkling wines Imports

27. China wine facts & figures
• China is the world fastest growing wine consumption
market
• Sales imported wine from 2004 from 25 into 377 Million USD
in 2009
• Volume grown from 7 million to 91 million litres (same
period)
• 2009 for the first time bottle wine imports exceed bulk wine
import volumes
• Yearly wine consumption growing per annum 7%, (1%
traditional wine countries)

28. Important influences in the wine business
New countries are entrance the market (Chilli – Romania)
Consumer pattern are rapidly changing
Prefers taste flavours: fruity, berry and vanilla wines with a touch of
sweetness
50% preferring lighter styles and 20% choosing strong flavoured wines
People believe that wine can help relieve stress and pressure
95% of consumers have limited knowledge about wine but are willing to
learn
60% of consumers prefer to buy imported wine if the imported wine and
domestic wine ate the same price
People believe the quality of imported wine be better at the same price
Wine is fashionable alternative to traditional Chinese rice wines and alcohol
Wine is a very popular gift for relatives and friends (very important is the
packaging)

29. Most important Trends in China
TRENDS IN WINES and LUXURY products
 Chinese wines consumption yearly increasingly
 Because Chinese mid class wants to try and they like it
 Consumers switched from ½ litres in 1 litres
TRENDS IN Wines: A dynamic market…
 Wine still a niche market in China, although sales have been booming from a very small
sales base since 2003
 Wine is now available in most developed cities (through international hypermarkets)
 The rising living standards, the expansion of modern retailing and the increasing consumer
likeability awareness will lead to a booming in Chinese Wine market the next few years.

30. IMPORTING WINE IN CHINA
An Oligopoly?
“An oligopoly is a market form in which a market or industry is
dominated by a small number of sellers (oligopolists)”

32. Distribution penetration %

33. We consider a market is an oligopoly from a market share
of 50% held by the market leaders.
So the question, we have to ask ourselves is either the
business of importing wine in China looks more like this:

34. Today, we can easily say that more than 50%
of the wine imported to China is imported by
one of these 8 companies

35.  Brand is the key in China.
 The market will grow thanks to big brands nationally and internationally
recognized.
 Therefore, these are two strategies to develop your market share when you
are importing wine in China.
 Either you build your own brand designed for the Chinese market (national
recognition).
 It is the strategy chosen by 9519 wines with Camons and by FWP with
French Paradox. or you import internationally recognized brands of wines.
In both cases, early movers importers control the wine industry value chain.
 They have the possibility to develop their own brand because they control
distribution channels.
 On the contrary, developing its own brand for a newcomer importer is
difficult because it will be hard to find customers to promote an unknown
brand even if it is designed specifically for the Chinese market.

36. How to sell wines in China?
To retail SELL WINES IN CHINA?
HOW TO
RETAIL
To consumers
CONSUMERS
To explore the wine experiences
MEDIA
To close the lack of knowlede

37. Who’s the wine distribution channels build up?

39. Major wine distributors/retailers and sellers in Shanghai
A pioneer of China wine imports, ASC is reputedly the biggest wine importer and distributor in
China. Sells a high proportion of premium level wine including some of the biggest brands in
ASC Fine Wine www.asc-wines.com
France and Australia. In 2009, ASC imported 12 new styles of wine, seven of those being from
New Zealand. Key customers are high end restaurant and hotels.
A leading distributor/importer of fine wines was established in 1995. Targets medium to high-end
market, stocks more than 1000 wines from 200 wineries selected from 12 countries. The company
Aussino www.aussino.net
owns their own retail outlets, wine club and undertakes wine appreciation courses. Aim to have
100 retail outlets and 50,000 wine club members by 2012.
Leading importers of international wine brands in China established the 1990s with regional
offices in Hong Kong, Macau, Guangzhou, Shanghai and Beijing, together with wholesalers in
various second or third tier cities. Clients include major 5 star hotels, top-end western
Jointek Fine Wines www.jointekfinewines.com
restaurants, leading Chinese restaurants, private clubs, night-clubs, supermarkets and retail
stores. Jointek imported two types of Australian wine in July 2009. Over sixty of their own retail
shops throughout China.
Focus on Italian wine import and distribution. Price of wines imported range from less than
Sino Drink www.channelvino.com
AU$16.00 to over $AU80.00. Distribution to Shanghai and Northern China.
Head quarters in Xiamen. Belongs to top 500 Chinese company, Jian Fa Group. One of the leading
distributors of white spirits. Starting importing wine in 2006. They distribute French, German,
Jian Fa Wine www.cndwine.com
Chile and Australian wine. Have retail outlets in 40 cities and distribute to 100 cities. Deal with
Castel from France and Constellation from America.
Small distributor and online seller based in Shanghai. Retail store in Shanghai. Focus on premium
Global Wine Shop www.global-finewines.com
wines.
Wine Mall is a wine retail shop set up by Global Beverages Asia. They sell over 800 types of wine
Wine Mall
from 14 countries.
Foreign owned distributor established by Miguel Torress in 1997. Now has the backing of Baron
Philippe de Rothschild. Focus on selling premium wines to major hotels and fine restaurants.
Shanghai Torres www.torreschina.com Offer wines from 14 countries including Australia. Regional offices in Shanghai, Beijing,
Guangzhou and Shenzhen. Online sales and offer free delivery within 36 hours in the centre of
those four cities.
Foreign owned distributor that commenced operations in Shanghai in 1999 and now have offices
in Shanghai, Beijing, Guangzhou, Shenzhen, Macau and Hong Kong distributing to hotels
Summergate Wine www.summergate.com
restaurants and retail outlets. Import from 60 wineries in 12 countries including a strong portfolio
of Australian wine.
Owned by Australians. Wine importer with offices in Shanghai and Beijing. Import wine
The Wine Republic
from 30 wineries in six countries. Strong focus on Australian wine.
Importer based in Shanghai selling Italian wines to a network across China. Strong
Sino Drinkwww.sino-drink.com
program of promotional events.
Set up in 2002. Small wine importer. Import wine from many countries including
Shanghai Vinna www.vinna-finewine.cn/
Australia. Supply to wine distributors and clubs.

40. Professional buyers target groups
 Wine Purchasers in (inter)national retail, agents and importers (b2c)
 Decision makers for gifts and relationship marketing
 Professional buyers for hotels, restaurants and other channels (b2b)
 Owners TV channels with local cooking program with (inter)national
chefs and wines
 Editorial suppliers for wine and dinner, (magazines, dailies, etc)
 PR offices
 Wine clubs/bars
 Online retail chains

42. Retail sales in China

43. Retail Shanghai
Market Additional Year Business
Retailer
Segmentation Information Started
ASC Fine Wines Import/Distribute/Retail* www.asc-wines.com 1996
Aussino Fine Wines Import/Retail/Wholesale/ Distribution www.aussino.net 1996 (1st retail shop in June 2006).
Aux Millesimes Import/Retail Shop address 415 Shan Xi Bei Rd 2006
Has 3 shops in Shanghai, can taste cheese
Cheese & Fizz Import/Retail 2002
and wine.
Enoteca Wine Lounge Import/Retail/Wholesale www.enoteca.com.cn 2007
Globus Wine Direct Import, Wholesale/Retail http://www.globuswine.com/ 2006
Golden Gate Wines Import/Wholesale/Retail www.goldengatewine.com 2006
Jointek Import/Retail/Wholesale www.jointekfinewines.com 1997
Just Grapes Retail www.justgrapes.cn 2007
Napa Reserve Retail/Wholesale www.napareservewines.com 2007
Summergate Direct Import, Wholesale* www.summergate.com 1999
Direct Import/On & Off Trade/
Torres China www.torreschina.com 1997
Retail/Wholesale*
Vins Descombe Import/Retail/Wholesale www.vinsdescombe.cn 2007
Ruby Red Import/Retail/Wholesale www.rubyred.com.cn
Wine Red Import/Retail A wine bar. 2007

46. Target groups end users
Thanks to the change of Chinese people’s likeability consciousness about
the consumption of wine and the improvement of Chinese people’s
standard of living, more and more people start to learn about wine and
buy it since it is healthier than most other cooking oils
 The target group of wine consumption can be described as follows:
I. Expats living in China (Beijing, Shanghai, Guangzhou, Shenzhen, bigger
cities in the East of China)
II. Chinese people with overseas living experience
III. High and middle class income young discover consumers
IV. People who seriously want to discover the experiences with wine and
their personal goal to express their wellness
V. Chinese cooking programs,
VI. Chinese schools with culinary experiences and want to integrate wines
in preparing meals

47. Main sales regions and channels wine
 Over 90% of imported wine is sold in large and developed cities, where people’s
consumption power is high and most large distributors are located
 In the retail sector wine is mainly sold in foreign retail chains and domestic supermarkets
which have helped the penetration of imported products in the most expensive and trendy
urban shopping areas
 Online stores are becoming a growing distribution channel nowadays

48. The China wine market opportunities
 The Chinese wine market, likes as an “egg timer” market.
 means that you have 2 distinct markets for wine trading in China: a low bracket one, on
which Chinese producers are unbeatable.
 Chinese producers cannot beat them on price.
 The second market is a very high bracket led by French Bordeaux and expensive wines sold
out before production.
 Between these two markets, medium priced wines are to find their place.
 And in this market, imported wine has a very good card to play.
 This is the challenge of the coming years.
 To import these wines, more and more trade companies are created or add the wine
business import to their portfolio. They then sell wines to wholesalers, wine bars, hotels,
restaurants, wine stores, supermarkets.
 Even if the market is still very spotted, major actors make the market. Among them ASC
Fine Wines, Summergate, French Wine Paradox, Torres, Mercuris, Aussino, H&L Fine
Wines.

50. Current Questions Chinese Wine Market
• Lack of the knowledge of use and experiences with wine in
general
• Do not know about how to taste and the differences in
grapes
• Lack of training the application of wine in cuisine and to
serve in dinner rooms
• Preferences in the current port folio of the leading
importers and agents in China

51. Consumer profile
Mass consumers Newly rich people
Male 66.2 Male 60.1
Female 33.8 Female 39.9
15-24 years old 17.1 18-24 years old 7.4
25-34 years old 28.2 25-29 years old 27.4
35-44 years old 28.8 30-34 years old 32.6
45-54 years old 17.1 35-39 years old 23.5
55-64 years old 8.9 40-45 years old 9.1
Government officials 3.9 Government officials 4.3
Technicians 12.7 Technicians 7.1
Managers 16.1 Managers 9.5
Common employees 17.5 Common employees 1.3
Employees in business, 22.7 Employees in business, 0.4
service and manufacturing service and manufacturing
sector sector
Self-employed laborers and 10 Self-employed laborers and 7
owners of individual owners of individual
enterprises enterprises
Freelance 1.6 Freelance 1.2
<1499yuan 41.2 <60,000 yuan 37.6
1500yuan -2999 yuan 30.2 60,000 yuan (including)- 35.2
100,000 yuan
3000yuan -4999 yuan 11.1 100,000 yuan(including)- 15.7
160,000 yuan
5000yuan -6999 yuan 2.5 160,000 yuan(including)- 4.3
200,000 yuan
>7000 yuan 1.1 200,000 yuan(including)- 4.3
300,000 yuan
>300,000 yuan 2.9

52. Change wine consumption Chinese urban resident

53. Wine drinking % of newly rich people

54. Analyses on value orientation of wine consumers

55. Analyses on brands conception of wine consumers

56. Where to buy

57. Entertainment around wine

58. Media consumption and knowledge about wine

59. Expectations about wine consumption
 China wine consumption rise to 31.58% by 2013
 2013 approximately 1.26 billion bottles per year
 Increasingly

60. Reports and researches
 Consumers in China say they enjoy the sophistication and feelings associated with drinking a good
bottle of imported wine, and are finding more room for it in their every day lives, according to the Wine
Intelligence China Landscape report. The report predicts that the number of Chinese consumers who
could afford to buy imported wine regularly will rise from around 23 million in 2010 to 80 million in
2025.
However international brands may miss out on this growth opportunity because consumers still find the
process of buying imported wine very difficult. While international hypermarkets such as Carrefour and
Tesco now carry a large range of imported wines, there is very little user-friendly information on the
shelf or on the bottle to help guide to the right choice.
 As a result many Chinese consumers still stick to domestic wines, which they acknowledge are often
lower quality than imported wines, but at least tell them, in their own language, what the product is
and how it might taste. "I think most of the wine industry round the world would agree that Asia in
general, and China in particular, represent a colossal opportunity for sales growth over the next 20-30
years," said Richard Halstead, COO of Wine Intelligence and project manager for the China Landscape
report.
 "Yet the closer you get to the market, the more you see that global brand owners have a lot of work still
to do, both in terms of distribution and product positioning, to really engage with Chinese consumers."
 He added: "We can be pretty certain that demand for wine will grow exponentially in the next decade
with the increasing wealth among Chinese urban professionals. The question is: whose wine will they be
drinking?"

61. MARKETING & DISTRIBUTION
STRATEGY

62. Market Entrance China strategy first ½ 2011 till June 2011
 Entrance our wine port folio on two fairs (Sial 2011 en Top Wine Collection Beijing)
 Product presentation in our hotels with the Dutch connenceur and the wine owners
 Personal invitation for company/purchaser e-mail with introduction for the Taste
Experience Meeting from China Entrance (Chinese and English language)
 Meetings with the press included press releases and picture manual
 Press materials included invitation for tastings
 Chinese website for company and product support
 Special import /agent environment for knowledge and market research sharing
 Marketing into the retail (Retail floor support)
 Press and video materials for TV and other direct selling channels
 Promotion material for retail and special shops
 dBase marketing concept for consumer experiences centre and sharing buyers profiles
 Sales strategy to importers and agents above retail approach


63. Market Entrance China strategy second ½ 2011 till
December 2011
 Entrance our wine port folio on local wine fairs
 Product presentation in our hotels with the Dutch connenceur and the wine owners
 Personal invitation for company/purchaser e-mail with introduction for the Taste
Experience Meeting from China Entrance (Chinese and English language)
 Meetings with the local press included press releases and picture manual
 Press materials included invitation for tastings
 Chinese website for company and product support
 Special import /agent environment for knowledge and market research sharing
 Marketing into the retail (Retail floor support)
 Press and video materials for TV and other direct selling channels
 Promotion material for retail and special shops
 dBase marketing concept for consumer experiences centre and sharing buyers profiles
 Sales strategy to importers and agents above retail approach


64. Synopsis
 We can offer:
High quality products
High quality services
Credibility
 We want to expand in Chinese market
 You know your market

65. We can address each of your criteria
 Network scale and resources
 Creativity and innovation
 Strategic leadership
 Collaboration
 Integration and brand knowledge
 Technology and solutions
 Competitiveness and Controls
 Relevant experiences

66. Why should you choose for China Entrance?
1. We are already a trusted partner working with different Wine Traders, /
2. We have global strength and an international superior products’ concept
3. Backed up with solid strategic marketing skills and brand experience
4. Our background gives us a head start in Wine trade & consumer marketing
5. We develop global, regional and local capabilities and expertise
6. We are creative and thought entrepreneurs
7. We have a philosophy and structure that delivers value
8. May be your company would be one of the top clients for the China Entrance network

67. THANK YOU
Henk Terol
Marketing_sales@chinaentrance.eu
Tel: 0031 75 6123987
M: 0031 654977703
Website:
http://www.chinaentrance.eu
Blog:
http://www.chinaentrance.eu