With a total wine purchases for USD 18 million in 2011, the so-called market bloc “Asia-Pacific” (leaded by China and Japan and followed by Taiwan, Korea, Singapore and others) is now booming.
With a promising forecast, wine consumption is expected to grow 53.7% between 2011 and 2015.
Data from the first four months of the year on Argentine bottled wine look auspicious. The rise of turnover up to April –according to data provided by the consultancy firm Caucasia Wine Thinking- was 41% compared to the same period last year: nearly USD 4.5 million with an average price of USD 38.29 per 9 liter case.
Susana Balbo, Wines of Argentina (WofA) vice-president and owner of Dominio del Plata winery, admits that for the first time there is a larger presence of Argentine wineries in China; in 2010 Vinexpo Hong Kong there were only 24 and today there are 34 participating wineries through WofA and 40 in total.
The average price for each exported case from Argentina (over USD 40 FOB) indicates that Argentina is not positioning in the lower segments of bottled wine. This is not a decision taken by wineries; it is a logic cost-benefit equation.
“Due to internal costs, no winery can provide low-cost wines. We cannot export under the USD 30 FOB price range. In this segment, China would be an excellent client; there are great opportunities in the USD 8 retail segment,” Balbo said.
Therefore, “the Long March” to China aims at the building of brands in the on-trade or “wine-by-glass” at restaurants and hotels. “I have been on this sale channel for three years. It is a brand-building channel; it does not move as fast as supermarkets and retailers, but it is the most adequate in the long run,” Balbo commented.
Diego Arguindegui of Bodega del Fin del Mundo, maintained that the most appealing channels are restaurants and the so-called “karaoke”. This last, is completely different from the American concept: hotels or buildings rent their rooms for these private parties with music, buffet and wine and a central stage to sing karaoke.
Go to China at least once a year
Susana Balbo has three years of experience in Asian markets and she believes that two trips a year would be ideal for brand building.
Arguindegui pointed out that “the cost of positioning Argentina in this market is great and implies long-term investments. However, expectations are high.”
On the other hand, Leonardo Guevara, Operation Manager at Altos Las Hormigas, stressed out that participating in Vinexpo is an investment rather than a cost. “Even if per capita consumption in China is not as high as in mature markets, the truth is that a small fraction of its inhabitant represents million of Chinese people with large purchasing power. Hence, investments made to develop this market will be recouped rapidly. Right now, we are working with four distributors in China, two in Beijing (over 20 million inhabitants), one in Shenzhen (over 10 million inhabitants) and the other one in Hong Kong (with a population of over 8 million).These three regions are the most interesting for their active economic population and high purchasing power.”