Icewine Finds a Niche in China

on July 29 2011 | in Trends Wine & Spirits | by | with No Comments

Vineland Estates Icewine

“Fifteen years ago, people didn’t like the taste of wine and would mix it with something else,” said Vincor Canada’s Randy Dufour.

With increasing wealth, more and more of China’s elite are looking for the next big luxury item to show off their wealth. As China’s middle class grows—Credit Suisse says the top 10 percent of Chinese household incomes has grown by 225 percent since 2004—it is beginning to see wine as a Western status symbol. Consequently, the popularity of wine is increasing, “even if they haven’t developed the palates of true connoisseurs.”

Dufour, who handles exports for Canadian icewine producer Inniskillin, says that “this generation may mix their Bordeaux with Coke,” said Dufour, “but the next will drink it as Bordeaux.”

With top French wines getting record-breaking prices, Canadian wineries hope their wines will win some fans of their own.

Greater popularity, however, does not mean greater knowledge of the product. While Westerners have a long history with wine and specific etiquette for consuming it, Chinese have no such background. Some Chinese chain-smoke during wine tastings; some take shots of wine as if it is liquor.

Canadian winemakers see market opportunities in the untrained wine palates of the rising Chinese middle class—especially in rural or interior cities. In areas with less sophisticated wine knowledge, consumers make purchase decisions based on price points, not reputation.

And that is where Inniskillin’s icewine—a cold, sweet drink created from winter grapes in the Niagara wine region and the Okanagan Valley—is finding a niche. Considered a luxury beverage around the world, one bottle sells for about $140-$200 in China. Agri-Food Canada reports that the country exported $8.6 million of icewine to China in 2009. China is the top export destination for the Canadian drink.

Inniskillin’s icewine entered the Chinese market ten years ago. In that time, Dufour reports a shift in the buying patterns of consumers. It began, Dufour says, as a gift item; now it is instead purchased for dinner banquet consumption.

Vineland Estates Winery, another Canadian producer of icewine, has also been in China for about ten years. Vineland’s Allan Schmidt says that the greatest challenge for wine exporters is finding distribution.

“Ten years ago, you would have a really hard time to find someone in China to sell your wine,” he said. “Everybody wants to be an importer, but no one wants to get into distribution.”

The development of the market and the rise of the middle class have helped improve that situation, though. “All I have to do now [to find a seller] is pick up my phone,” Schmidt said.

The fight for wine is not finished with distribution, however. Last fall, Schmidt lost a legal battle to protect his trademark in China against a company that was imitating the Vineland label.

Knockoffs are pervasive in China—from wine labels to Apple products to designer handbags—and Schmidt marks the experience as a lesson learned.

The risks of trademark infringement, however, are overshadowed by the potential in the Chinese market for icewine producers.

Robert Beynat, executive of Vinexpo, the international wine trade show in Bordeaux, has an eye on China as well—but he cautions for patience.

“[In China] it’s not one billion wine consumers, it’s probably 150 million, which is still good, but it will take time to find them,” Beynat said.

image credit: vineland estates winery

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