Chinese Market Thirsty for Washington Wine
October 5, 2010 by Brian C. Clark
Economists at Washington State University are investigating ways to market Washington wine to the growing Chinese consumer market.
The research consists of examining Chinese preferences for wine from different countries coupled with economic experiments, said economics professor Jill McCluskey.
“It is important to understand Chinese consumers’ preferences so the United States can enter this growing market,” McCluskey said. “There is great potential within this market.”
China is one of the most populous nations in the world, and currently, per capita wine consumption within China is at 0.3 liters. This is meager in comparison with France and the United States, which are set at 59 liters per year and 12 liters per year, respectively.
“If per capita wine consumption in China rose by just 0.1 liters per year, that would mean consumption would rise by 100 million liters,” said Hainan Wang, a graduate student who assisted McCluskey in the study. “There is so much potential to create incredible profits by marketing wine to China.”
Currently, Chinese consumers perceive wine as stylish and prestigious. The Chinese prefer imported wine, and there is a preference for French wine among consumers, McCluskey said.
“The Chinese market has shown a huge inclination towards French wine,” McCluskey said. “If you look at the wine on the grocery shelves in China, it is mostly comprised of French wines. Wine is a product you develop a taste for, so consequentially, the Chinese consumers have developed a taste for the French wines.”
In a study conducted by McCluskey and Wang, an auction was held to determine willingness to pay for imported wines amongst domestic consumers. The study found the largest willingness to pay among consumers for French wines, followed by wines from Australia and the United States. The wines which held the lowest willingness to pay were domestically produced Chinese wines.
“It is interesting because, in China, domestically produced wine has a reputation for poor quality,” Wang said. “The interest among the consumer is mostly in imported wine, which is where wine produced in the United States gains an advantage.”
McCluskey said wines from the United States have the potential to capture a significant portion of the Chinese market if effective marketing strategies are applied.
“Right now, Chinese consumers tend to buy French wine, but they are not buying the wine, they are buying the identity French wine conveys,” McCluskey said. “If the United States could establish this identity, then these wines could prosper in this market.”
Intern Kathryn R. Sullivan contributed to this article.