The complexities that surround the sales and distribution of wine and spirits in China, are also applicable to their marketing. It is therefore imperative that you build a robust marketing and brand building plan for China that is firmly rooted in detailed market research. The marketing techniques you use in China will no doubt be very different to your other markets around the world so merely trying to replicate your plan for the UK or the US will not work here.

Market Research

More than any other market, China requires that you spend time researching the market. A number of trips to China is strongly recommended so that you can begin to understand firsthand the various complexities at work and avoid making costly mistakes. A huge array of external factors can affect the success of a brand in China including political, economic, social-cultural, technological, legal and environmental. It is vital that you have an understanding of these factors before entering the market.

Investment Requirements

A significant amount of investment needs to be made from the outset for successful marketing and brand building in China. This will come in the form of both time and money. Exporters should factor these costs into their business plans and ensure that they have an attractive offer to put in front of importers. Any investment made by the brand should be matched by the importer if the importer is also serious about brand building.

Intellectual Property

It is imperative to have your IP fully protected before entering the China market. This includes your Latin trademark and logo as well as any other proprietary marks you may wish to secure. It should also include your Chinese brand name which you should make efforts to create, test and register before you send any stock to China. Using lawyers outside of China to do the registration process can be very expensive so it is recommended to find a trustworthy local lawyer.

The importance of creating a thoughtful Chinese name that will appeal to and resonate with the Chinese consumer cannot be understated. This is not merely a translation but a necessary branding exercise. The examples of Penfolds (奔富 “Ben Fu”), Lafite (拉菲 “La Fei”) and Casillero del Diablo (红魔鬼 “Hong Mo Gui”) are all evidence of this phenomenon. Brand building companies like Nimbility and China Skinny can help brands to create thoughtful Chinese names that will become integral to a brand’s success in the market. Once created, Chinese brand names should be registered as IP with the China Trademark Office in Beijing in the same way as should be done for any Latin IP.

Marketing Materials

All marketing materials such as brand presentations and product fact sheets should be translated into Simplified Chinese for ease of presentation to importers who potentially don’t speak much English and further down the track for sales training. It is also worth translating your website into Chinese if you are serious about selling into China, particularly because Chinese consumers are accustomed to doing research online before making a purchase. This is even more so the case for foreign products which they may not have much knowledge about.

Promotions

It is important to understand the basic rules and regulations governing the promotion and marketing of alcohol in China. One important area falls under the regulations in China regarding commercial bribery and unfair competition. In a basic sense the government prohibits the provision of any compensation or benefits in cash or in kind to a third party customer in exchange for sales or commercial advantage. This would include:

A monetary or non-monetary “sales incentive” to the employee of a customer in exchange for reaching a sales target or for advantaging the sales of your brand
An incentive trip or junket, be it to your winery and region, or as an incentive to a tourist destination, in exchange for achievement of a sales or commercial target
Provision of valuable materials such as crystal glasses or decanters, refrigerated wine cabinets, expensive wines, or other valuable materials, directly to a buyer’s organization in exchange for listings, volumes or commercial advantage

It is important to note the large distinctions that exist across the On Trade channel, with important and very distinct sub-channels e.g. KTV Clubs, traditional Chinese restaurants, international restaurants, 4-5 Star Hotels, Nightclubs and Lounges, western or cocktail bars, etc. Common promotions in the on-trade include:

Wine of the Month promotions typically featuring a pair of red and white by glass, or a compact selection of wines, often supported with tabletop or menu POS, a briefing to the floor staff, and a price offer from the importer. More advanced versions of this might include wine preservation systems of various different kinds.
Wine list feature pages and menu inserts, or other merchandising that features your wines for a period of time
SPGs (see below) are often deployed in traditional Chinese restaurants to tout wine brands table to table and implement consumer promotion on site
Collaborative promotion and event programs with a visiting chef, winemaker, master distiller or brand owner
Feature pages in wine/cocktail lists

Common promotions the off-trade include:

Gift-with-Purchase, a promotional gift with a minimum purchase, e.g. a pen, a screw pull, glasses etc.
Gift or Value-Added packaging, particularly around the festive seasons of Chinese New Year and Mid-Autumn/National Day.
Display promotions, aisle-ends, gondolas
In-Store Tasting and Sampling promotions, usually supported by merchandisers or SPGs
“SPGs” or “PGs” (sales promoter girls) - as they are described in China - are very commonly deployed across traditional off trade in China in particular large supermarkets, hypermarkets and NKAs. Their job is to work the wine/spirits section daily typically on behalf of the importer’s full range of brands, merchandising, stocking, and promoting to consumers.

Advertising

There are numerous laws in effect when it comes to advertising in China. The most significant one for the wine industry is Article 23 of China’s Advertising Law that states:

Alcohol advertisements must not contain the action of drinking; inducing and inciting drinking or promoting uncontrolled drinking; activities such as driving vehicles; and implying that drinking alcohol can have the function of eliminating tension or anxiety, or increase physical strength and other effects.

Another key point to remember is that the use of superlatives when advertising in China is prohibited. Brands that use extreme words can be fined up to 1 million RMB.

Below is a summary of prohibited words by category:

Note: This is not a comprehensive list. To avoid running into any trouble when advertising in China, it is best to avoid words that sound too definite or extreme.

The advertising law also regulates any advertising spokesperson that may be used. This refers to a person or organization using its name or image to endorse a product. The spokesperson may not recommend products or services he or she has not used themselves.

In addition, to avoid disrupting internet users, a one-click close option is required on pop-up advertisements. Advertisers are not allowed to send advertisements in emails without permission from recipients, and email advertisements must include opt-out links.

Penalties for false advertising also exist if an advert damages the interests of consumers by being misleading or false.

Sponsorship & Co-branding

Carefully selected sponsorship and co-branding opportunities can be a good way to reach new consumers. Smaller events usually look for product donation, rather than fees, which is an easy way to place your brand in front of targeted audiences.

Dinners

These are a popular form of doing business in China but can be very costly. Dinners usually start and finish early but business often continues over drinks at a bar or KTV outlet.

Masterclasses

Still popular particularly in Tier 2 and 3 cities where local bartenders in particular relish the opportunity to learn and meet with brand owners, winemakers, master distillers etc. In Tier 1 cities, where competition is higher, content and speaker must be considered carefully to draw attendance.

Bartender guest shifts

Still relevant but Tier 1 cities have been inundated with these over the past few years so to work well location and guest bartender must be considered carefully.

Brand Led Tastings & Events

Generally brands are moving away from traditional styles of tastings and events towards more bespoke experiences that will surprise and delight both trade and consumers.

Packaging

Traditional packaging is still generally the preference in China as a general rule, with heavy bottles, cork closures and wooden cases for wine often requested by importers. Spirits tend to have more flexibility. More sustainable packaging options are often viewed as less premium by Chinese consumers.

Tourism

Chinese tourists are travelling more than ever. Wineries and distilleries that cater for Chinese speakers will benefit from this effort.

Key Trade Fairs, Events, Competitions

Attendance at trade fairs and events can still be a good way to get your products in front of potential buyers and make new contacts, however, these should be chosen with care in terms of investment requirements and desired results.

Trade Fairs

The following are some suggestions, by no means exhaustive:

China Food and Drinks Fair Chengdu, March
SIAL Shanghai, May
Vinexpo Shanghai, October
Prowine Shanghai, November

Consumer Events

Decanter Fine Wine Encounter Shanghai
Robert Parker Wine Advocate Matter of Taste
James Suckling Great Wines of the World Beijing
Bettane & Desseauve Le Grand Tasting Shanghai
Whisky L, Shanghai
SIP Festival, Shanghai

Competitions

IWC China
Wine100
DRiNK Magazine Bar Awards
China Bartender Competition during Hotelex

Next week, and for our final instalment on the China market, we will be looking in more depth at the all important area of Digital Marketing in China and how and when to work with Chinese Influencers. Stay tuned till then!

China Market - Traditional Marketing