Posted on | February 13, 2014 | No Comments
By Jim Boyce
Lots of companies know the trauma of learning that their brand has been trademarked — some might say hijacked — in China by someone who often has no relation to the wine business and that they have little recourse — besides perhaps paying a barrel full of money to get it back — given the first registered, first served nature of the legal system. A revised trademark law, set to take effect May 1, is positioned to curtail such situations:
“The new law states that trademarks shall be registered and used in accordance with the principal of good faith,” states this “Lex Vini” wine blog post by the law firm Dickenson, Peatman & Fogarty.” More from the post:
On the one hand, distributors and manufacturers are advised to refrain from applying for a trademark identical or similar to a trademark which has been used earlier (but not yet registered) by their partners, with respect to identical goods or services. “Partnership” is interpreted in a broad way to include contractual relationships, business relationships and other relationships.
As an added boon, the amendments prohibit a trademark agent in China to handle a trademark application if it knows or should know that the client’s application is an attempt to usurp or hijack another person’s trademark or is made with intent to preemptively register, in an unfair manner, a trademark that is already in use (but not registered) by another person who enjoys a certain reputation. Moreover, trademark agencies are prohibited from registering trademarks in their own names for other services outside IP services.
Put into practice, this should provide a much better intellectual property regime in China, the world leader last year in terms of local and global patent filings, according to this post by the World Intellectual Property Organization. Of course, it doesn’t negate that the best strategy is to register your trademark as early as possible.
For more, see this summary by the National People’s Congress, this English version of the new rules as translated by Bridge IP Law Commentary, and this article, which points out some ambiguities, by Cornell International Law Journal.
Posted on | February 7, 2014 | No Comments
By Jim Boyce
The Year of the Snake has slithered off, the Year of the Horse has trotted in, and people are wondering what is ahead for the China wine trade. Below is a story I wrote for Wine Business International with interviews of professor Ma Huiqin of China Agricultural University, Alberto Fernandez and Ian Ford of distributors Torres and Summergate respectively, and owner Weiley Lu of Beijing wine shop The Loop, who is also the city’s rep for Shanghai-based importer Tinta Fina. I’ve also included some bonus quotes afterward — I didn’t have enough space for all of them in the story.
First published by Wine Business International. Reprinted here with permission.
Predictions for the Chinese market in 2014
Given strong annual import growth that regularly topped 50% during the past decade, the numbers for China in 2013 – volume up 4.8%, value up 0.5% – seem dire, especially with steep drops in the third and fourth quarters. What lies ahead as we trot into the Year of the Horse? Some things to consider:
First, don’t expect those galloping years of high growth to return.
“I think there will be a decrease in the overall volume and value of imported wines, the same with domestic wineries,” says Ma Huiqin, a China Agricultural University professor and wine marketing expert. “For those agents or companies who depend on official spending and gift wines, 2014 will be a hard time.”
In other words, expect the government’s austerity drive to continue curbing entertainment budgets.
“Companies that rely on government-related business, including state-owned enterprises, as their primary source of income have been hammered — many of them will downsize or will disappear,” says Ian Ford of wine distributor Summergate.
That means greater focus on what Alberto Fernandez of Torres calls “end consumers, family pockets and private corporate business”. He foresees efforts to target younger consumers and shift buyers to wine from other drinks.
In general, consumers will exert more power, says Ma: “They will have more confidence about what they like and what they want to buy.”
Some companies are already positioned for this, including Beijing wine shop The Loop.
“As our price range is considerably lower, with 80% of our products under rmb500 ($82.00), we have never focused too much on government sales that are heavily reliant on connections,” says owner Weiley Lu, who has already seen more private customers trying new wines.
Consumers should also see lower prices from a wine surplus due to the rapid growth of importers over the past five years. Ford calls stock sell-offs “rampant” and says “we can see a premium imported brand traded on e-commerce outlets at less than half the normal retail price”.
As for online sales, these should continue to grow in importance, though perhaps not profitability, says Ma, who cites sustained fierce competition. She also expects traditional wine distributors to increasingly focus on online.
But Fernandez stresses the need to look past standard online platforms and to newer ones, including the popular social media application WeChat. “Purchasing habits are moving fast and we need to monitor them before we become phased out in our marketing approach,” he adds.
For his part, Lu says online shops are costly to create and maintain and do not necessarily help consumers. He favors mailing lists since they facilitate more intimate communication. For the same reason, he sees wine shops growing in importance. Websites are not substitutes, “just as robots cannot not replace well-trained waiters and sommeliers.”
In the end, it all seems to point to a year that will feature an increasingly sophisticated market with smaller volume, less value and fewer distributors. That might not be so bad.
“Overall I see this as a good trend and signaling the beginning of a more mature market,” says Fernandez.
Ford on the austerity program:
“The austerity program has been a seismic event in the China beverage alcohol industry. Despite reports across international and domestic media, and reporting from publicly traded companies, the impact on all levels of the trade across China is still underestimated.”
Ma on consumer attitudes:
“Wine will become more of a regular commodity and less of an “icon” drink. There is more transparency with wine prices and users’ remarks will be more important as a reference on purchasing decision.
Lu on his shop’s customers:
“I see Beijing consumers starting to believe that not all expensive wines are good. I’ve been educating mostly entry-level drinkers regardless of their budget, to start with something simple but typical, and go through a set of wines before they explore their favorite palate. In terms of wine drinking trends, I see far fewer requests for Bordeaux, and more consumers eager to try Burgundy and Italian and Spanish wines.”
Fernandez on prospects for Grace Vineyard and Silver Heights, two Chinese labels in Torres’ portfolio:
“Both are very healthy because they are extremely consistent with their respective values and goals: quality and passion for making the best Chinese wine possible in their own regions. I am very happy to see that more and more good brands are coming up in the market and from many other regions. That can only help to change the perception for the Chinese wine category. But that will require time.
Posted on | February 5, 2014 | 1 Comment
By Jim Boyce
I posted last week re some of the 2013 wine import stats for China. Below is a story I wrote for Wine Business International (you can register for the WBI newsletter here). Two key takeaways: 1) When you exclude the huge influence of France, the numbers for 2013 look far better; 2) growth in 2013 came in the first half, with the second half seeing a steep drop, something that does not bode well as we mosey into the Year of the Horse. Here is the draft:
“Although the Chinese market is still showing signs of growth, with bottled wine imports rising 4.8% in 2013, there are reasons for caution. Value per case fell.
“The sobering stats show volume rose 4.8% to 279m L, from 266m L in 2012 – a stark result in light of recent years, where rises topped 50%. The splash of cold water came in the numbers for value, up just 0.5%, or $7m, to $1.4bn. The result: value per case actually fell 5.3% to $47.00.
“France easily retained its spot as market leader, with 46.1% by volume and 47.6% by value. Even so, it underperformed in 2013. Volume rose 1.1% while value fell 9.5%, a spread that points to the Chinese government crackdown on official spending, one that no doubt covers pricey French wine.
“When French figures are contrasted with those of other top ten sources, including Australia, Spain and Chile, the situation looks better. Those nine collectively saw growth of about 9% in volume and nearly 15% in value, not far off the numbers for 2012. Seven of them saw volume growth, including three in double digits, while all of them gained by value, including seven in double digits.
“France, Australia, Spain, Chile, Italy and the US, ‘the big six’, again combined for over 90% of market share by volume. Australia (a 13.1% share) retained its second-place position, with imports up 7.5% by volume and 8.8% by value. It had the highest value per case at $56.00. Spain took third spot (10.7% share), rising 11.4% by volume and 16.5% by value, though it easily had the lowest value per case at $28.00.
“Chile (9.2% share) saw the biggest gain by volume, at 22.6%, and also rose 15.1% by value. Italy (7% share) rose 1.5% by volume and saw the biggest gain by value, at 15.2%. Rounding out the big six, the U.S. (4.6% share) was down 1.5% by volume but up 12.4% by value.
“Volume gains [were] easily outpaced [by] those for value for a number of sources outside the big six, including Portugal (up 13.7% by volume versus 27.8% by value), Argentina (6.5% versus 22.8%) and Germany (3.6% versus 17%). South Africa was relatively flat, down -1.6% by volume and up 2.4% by value, while New Zealand saw volume drop a whopping 23.5%, although the fall in value was shorter at 15.7%. New Zealand had the second-highest value per case at
$85.00 $93.00, behind only Canada at $109.00 $110.00. [I mistakenly included the 2012 by case figures for Canada and New Zealand in my draft.]
“With so many sources posting gains in volume, value or both, the wine import story beyond France seemed to be heading in a positive direction last year. One final contrast should cause concern: the quarterly results.
“Versus 2012, bottled still wine imports rose 21% in the first quarter and 10% in the second quarter of 2013. Then came the bad news. Imports fell 7% in the third quarter and 9% in the fourth quarter, with France, Australia, Spain, Italy and the United States all either flat or losing ground. Thus, while there are reasons to see 2013 as better for most sources than the overall numbers suggest, there is good cause to be cautious about 2014.”
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Posted on | February 4, 2014 | No Comments
By Jim Boyce
Leading China producer Changyu and TxB International Fine Wines will again team up on a stand at trade fair ProWein, slated to start March 23 in Germany. The 100-square-meter space will be split between the two, with Changyu bringing a team from China to serve its wines and TxB presenting its numerous partner brands.
The wines will include a pair made via their joint project in the Ningxia region: Chateau Changyu Moser XV Cabernet-Merlot and Moser Family Cabernet Sauvignon. A TxB newsletter states the latter will soon be available on the European market, with a suggested price of rmb200 (Eur25), and is “the first premium wine from China worth the money.” Adds the newsletter:
You will find the special terroir of China’s youngest and most fascinating wine growing region Ningxia, which is blessed by 3,000 hours of sunshine per year and ideal conditions at 1,100 meters above the sea. The result of a serious long-term cooperation between Changyu China and European winemaking expertise.
The Changyu wines are expected to include a Chardonnay-Riesling and Cabernet Sauvignon from Ningxia and the Golden Diamond, Blue Diamond and Black Diamond brand ice wines from Liaoning province. More may well be added. I will update if I get further details.
Find the wines at Hall 3, Stand F77.
Note: Massive Chateau Changyu-Moser XV opened last summer in Ningxia: click here for 20 photos from launch day and here for my interview with Lenz Moser. Joint Changyu-Moser wines have already been sold in Europe, including by Waitrose and Berry Bros. & Rudd.
Posted on | February 3, 2014 | No Comments
By Jim Boyce
A recent 1421 Wines event in Beijing speakeasy-style venue Fubar showed how to provide more fun and marketing pop at a low cost.
The plan was to give away entry-level 1421 Cabernet Sauvignon and Chardonnay for an hour, with the price then rising to rmb14 and rmb21 per glass for the ensuing two hours. Given the brand is named for China’s most famous seaman, Admiral Zheng He, and he lived during the Ming Dynasty, the staff wore costumes of that era.
Those costumes turned out to be a hit as a dozen or so of the 50-plus attendees tried them on during the night. The result is 1421 not only promoted and got feedback on its wine but also saw people enjoy themselves by dressing up, taking photos — sometimes while showing the company’s logo — and sharing them with friends. Yes, it’s a small marketing matter, but it shows how a little effort and money — costume rental totaled rmb210 (USD35 / EUR25) — can add some fun.
Also, the wine came in martini glasses. The inspiration was a session a month earlier when wine glasses ran out and, rather than cork the bottle, we switched. True, a wine glass bulb captures aromas and allows for greater appreciation of the liquid inside. But this was a fun change of pace and the option still remained of using “proper” glasses.
Note: 1421 was founded by Hong Kong’s Johnny Chan and Chile’s Andrónico Luksic. Spokesman Randy Svendsen — at right, top photo — handles distribution for hotels, bars and restaurants and the wines are now in more than two dozen venues in Beijing as well as in Metro stores throughout China.
Posted on | February 2, 2014 | No Comments
By Jim Boyce
Sommelier Hans Qu spent the last three months of 2013 traveling through Chile — visiting vineyards, drinking wine and hanging out with Patricio Tapia of the guidebook Descorchados. (Chilean hospitality must be good because he looked very healthy when I saw him in Beijing a few weeks ago.) Wines of Chile posted this interview with Qu about his travels, the wines he liked and his background in the industry. He also made some comments about China (my highlights):
Chilean wine has a very good reputation in China. It is the best value, and in the future Chilean wine has a very good market in Asia. If just one percent of the Chinese population drink wine every week, the whole of Chile would have to plant vines everywhere – on the rooftops even!
But Chile faces a problem with the Asian market because it is so far away, it takes 35 hours to get here. I want to let [Chinese consumers] see what I am seeing and share with them the experience. I hope I can bring more people to Chile to share the experience, too.
Qu also covered the changing face of the Chinese consumer market and the students in his classes:
Before people went for the most expensive wine or something very cheap and now people are getting more interested in different wine, it is a very good direction that I see. I also see more and more people coming to study, it’s very interesting. People come from all the different industries, the oldest pupils I have are 70 years old and the youngest is 15 years old. Her mum sends her to the class because [she thinks wine] is really good for health!
For the full interview, click here.
Qu was winner of the China National Sommelier Competition in 2009. I also know him as a judge in the Ningxia Wine Challenge in 2012 and as a participant in this tasting of nine Chinese wines just a few days before he flew to Santiago. In any case, I think it’s safe to say we’ll soon be hearing more about him in regard to Chilean wine.
Posted on | February 2, 2014 | 1 Comment
By Jim Boyce
Some $500,000 will go to marketing Hawke’s Bay wine in China over the next three years due to funding by the AGMARDT (Agricultural and Marketing Research and Development Trust), according to this story by Roger Moroney in Hawke’s Bay Today.
“Over the past five years we’ve seen an explosion of opportunities in China,” said Lawrence Yule, mayor of Hastings in the Hawke’s Bay region. “It is going very well because they like our products there.”
Here’s more from the article:
[Hawke's Bay Winegrowers executive officer James Medina] said 17 Hawke’s Bay wineries had initially signed up to be a part of a three- to five-year China marketing programme focusing on tasting and education events, public relations and social media marketing.
The funding approval was significant as the Hawke’s Bay wine industry was going up against international players like France, Spain, Australia and Chile who were also targeting the China market.
New Zealand is unique in having the highest-value per case among the top twelve sources of wine imports in China. At USD93, it stood 30 dollars ahead of second-place Australia at USD56. Unfortunately, New Zealand had the toughest time last year of those twelve. The positive news is value per case rose 10 percent, but it came on top of a drop in volume of 24 percent to ~2.6 million bottles and value 15 percent to ~USD20 million. Why? One theory is the impact of the government austerity program although I have never particularly associated New Zealand wines with official spending. If anyone has an alternative reason, please let me know.« go back — keep looking »