01.28.08
Posted in Campbell Thompson at 5:35 pm by admin
By Campbell Thompson
Let’s say you dine in a five-star hotel in China, decide to order a bottle of wine, and spot one on the menu for RMB 400.
How did the wine get listed at that price?
There are three key factors at work.
First, the combined import duty, value-added tax and consumption tax for imported wine works out at about 48 percent of landed cost. In other words, in order to get its RMB 100 wine into the country, the importer ends up plunking down RMB 148. That’s fairly high by world standards, though some other Asian markets, such as India, Thailand and South Korea, have higher duties.
Second, there is the importer’s margin. This may range from 30 percent to 60 percent in China (acquiring accurate information from importers is difficult). This margin needs to cover the company’s overhead and, to be sure, selling wine in China is expensive given the size of the country, relatively high distribution costs, and considerable effort required for wine education and promotion, among other things. Many importers bring in relatively small volumes of each wine. This makes it more expensive per unit and is another factor in determining price.
Third, there is the margin of retailers or hotels and restaurants. Some retailers, such as Carrefour and Wal-Mart, are famous for their low prices, but do pass on expenses such as promotional fees to importers, thus the price paid by the consumer for a particular wine may be higher in China than in other countries.
Then there are high-end hotels and restaurants. They often use excessive markups on beverages, including wine, to help make up for food revenue that usually barely covers costs. It’s not unusual to find a markup on wine of between 250 percent to 350 percent.
Here’s an example of how the process might work:
- The importer pays RMB 65 per bottle for a particular wine
- After duties and taxes, the cost to the importer is RMB 96
- The importer’s margin adds 45 percent, thus increasing to price for a hotel or restaurant to RMB 139
- The hotel or restaurant marks up the wine 300 percent, and thus take the price just over RMB 400
In many cases, this RMB 400 wine could be gotten less expensively in other places around the world - and especially in the country it was produced in. In my next post I’ll elaborate on how restaurants can reduce their markups, sell more wine and boost their revenue.
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01.03.08
Posted in Campbell Thompson at 7:17 pm by admin
By Campbell Thompson
China’s major cities are a burgeoning wine lover’s paradise that offer budding oeneophiles the chance to sample many of the world’s great wines.
“A wine lover’s paradise?” you ask. “Surely that’s just a bit of New Year’s celebratory hyperbole?”
Well, perhaps “paradise” is going too far, but Beijing and Shanghai are great places to be if you speak English and have a moderate amount of money, by Western standards, in your pocket to invest in your budding wine habit. Consider:
- Unlike in most other major wine-producing countries - and China is a major wine producer, at least in volume terms – wine lists in Shanghai and Beijing tend to have a wide range of countries and wine styles represented. It is rare to see any North American or South American wines on lists in Australia. It is rare to see any imported wines at all in France, Italy and Spain. The best wine bars, restaurants and quality retailers here have wide selections of wines from around the world. If wine variety is the spice of life, Beijing and Shanghai measure up well.
- Almost all of the world’s most famous wine-makers and winery owners visit China, many of them annually. Beijing and Shanghai have a large number of outstanding wine dinners, tastings and events that provide the opportunity to learn about these wines firsthand from the people who made them. The last twelve months has seen some of the biggest names in wine grace our shores, from Penfolds’ Chief Winemaker Peter Gago to respected Napa Valley producer Doug Shafer to Decanter “men of the year” Miguel Torres and Ernst Loosen to more than 60 owners of Bordeaux’s finest producers. Well-known wine writers such as Jancis Robinson, Robert Joseph (both from the UK) and Jeremy Oliver (Australia) visit regularly and host wine events.
- Many events here are cheaper than they would be in, say, London or New York. These events are usually subsidized by the producer - and maybe the importer, too - to promote the wines in China. In many cases, the supply of events outweighs current demand.
- Attending most events does not require any special connections or membership. Simply get yourself on the mailing list of the major wine importers and you will receive event information by email.
- There are also a good number of events which cost 100 RMB or less to attend and - once you know how to find them - some good free events.
The downside?
- Some events are still quite expensive in absolute terms, so unless you are positively rolling in it, there’s probably a limit to how many elite events you can attend. Plus, a good portion of the fee is usually for the multi-course dinner paired with the wines.
- There are still relatively few events pairing international wines with high quality local cuisine.
- Most events are in English only and cater largely to the expatriate community. While wine importers talk about serving the local market, their actions imply a far greater interest in the English-speaking market.
- Many wines available in retail are more expensive in China. For example, Penfolds Koonunga Hill Shiraz is RMB 60-65 in the US (USD8-9) and RMB 95-100 in the UK. In China, the same wine often costs RMB 200-250. Making things worse is that there is a lot of slightly damaged wine sold in retail, due to most wine importers not using adequate temperature-controlled shipping and/or storage.
So while China isn’t the best place to buy wine in retail, since it often costs more and there are shipment and storage issues, Beijing and Shanghai are good cities in which to attend high-quality wine events and tastings.
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11.05.07
Posted in Campbell Thompson at 3:52 pm by admin
Grape Wall of China will soon begin including contributions from ten people involved in the Greater China wine scene as academics, wine-makers, distributors, educators or consumers. To kick things off, I will post a profile each day. (For more China wine info, join the Grape Wall of China group on Facebook and/or sign up for my free e-newsletter by emailing beijingboyce@yahoo.com with “sign me up” in the subject line.)
Today’s profile: Campbell Thompson
Main focus: Chinese consumers
“Campbell Thompson grew up in South Australia, close to Coonawarra - one of Australia’s most respected wine regions. Campbell has lived and worked in Beijing for close to 10 years, and worked for China’s largest wine importer for more than four years. He’s completing a Masters degree in Wine Marketing (yes, there is such a thing), and is a big fan of red Burgundy, good Riesling and Coonawarra Cabernets (though not all at once).”
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