(Yicai Global) June 26 -- China's biggest wine importer COFCO Wine & Spirits aims to transform the image of its traditionally low-end domestic Great Wall wine brand with the launch of new a new premium brand.
COFCO is introducing Great Wall Terroir wines priced at CNY200 (USD30) to CNY300 with the goal of becoming a Chinese chateau wine tapping domestic consumer's thirst for a "balanced sweet flavor", Li Shiyi, general manager of the Beijing-based company's wine division, told Yicai Global.
Li joined COFCO's wine business in the second half of last year, being in wide-sweeping changes to the brand often seen a budget option in China. He divided existing products into five sub-brands, namely, Chateau SunGod GreatWall, GreatWall Five-Star, Changli Huaxia, Ningxia Terroir, Penglai Coast, with five price-tiers ranging from CNY150 to 500.
He has brought the biggest changes to China's western Ningxia region where Terroir wines are produced.
COFCO targets China's middle-income families with the Terroir brand as a premium Chinese wine with a high price-to-performance ratio, Lv Xianxun, general manager of Haina Brand Planning, told Yicai Global
Chinas middle class has exploded in recent years on the back of the country's rapid economic growth, reaching 430 million at the turn of last year, according to US-based Brookings Institute. China's relatively well-off population is expected to reach some 780 million by the mid-2020s. The rise in affluence has led to a higher level of sophistication among consumers and demand for premium products is increasing.
Ningxia is China's largest producing region of Chinese chateau wines. Wang Qi, executive vice president of the China Alcoholic Drinks Association, told Yicai Global that although Chinese chateau wines sweep awards on the international arena, they do not sell well domestically due to elevated prices and a lack of knowledge among Chinese consumers.
"Now the situation has changed," said Zhao Shihua, a researcher at the Helan Mountain Wine Industrial Park in Ningxia. The previously elevated price of Chinese wines was due to investors' eagerness to recoup costs within a short time frame. After years of market operation, prices of 90% Ningxia wines have now fallen back to CNY 100 to 300."
Wines are a cultural product and, in the field, there exists a mentality of "whoever imparts wine knowledge to consumers will be trusted by them". Since wine tasting and its cultural systems originate in Western countries, China has no say in the sector and naturally it remains difficult for Chinese wines to gain recognition in the market, Zhao added.
China Alcoholic Drinks Association has also set up a China Wine Strategy Steering Committee to draw on the successful experiences of major wine-producing countries and establish a Chinese wine evaluation system to improve the domestic sector's profile.
There are tremendous differences between Chinese and Western countries in tastes, Zhao said. That will cause different requirements and focal points for wine evaluation systems. The development of China's own evaluation system can help consumers to develop a correct knowledge of domestic wines so as to spot and purchase good wines.
Editor: William Clegg