It’s hardly a surprise that the Chinese have a sweet tooth, given that sweetness is an essential element of many regional delicacies. Yet, aside from cheap Moscato Spumante and not very impressive late-harvest wines from random grapes that retail for no more than $7.00 to $8.00, Chinese consumers have not so far embraced sweet wines. But that’s changing, as younger consumers begin to show interest in more premium sweet wines from around the world.
It was only three or so years ago that customers searching for wine on major ecommerce platforms such as JD.com or Taobao.com would land on pages full of ‘Six for 99 RMB’ ($14.43) basic Bordeaux AOC or Spanish red. However, a new generation of online retailers catering to young consumers has emerged, many of which specialise in premium sweet wines that typically retail for around $15.00 to $20.00 a bottle.
New merchants
First Growth Sauternes, Tokaji Aszú, Canadian Icewine, and German Spätlese and Auslese from VDP producers are among some of the items featured in these shops, 90% of which are based on Taobao.com – which hardly comes as a surprise, thanks to its more welcoming approach towards smaller businesses. Upon visiting these online shops, customers will be greeted with a well-crafted welcome page. Not only do the sites look good, but what is even more impressive is the volume of wine they sell every month. Ms Yuan’s Sweet Wine Shop, for example, offers a private-label sweet Moscato from Italy priced at 69 CNY which has accumulated more than 7,220 reviews. This converts into at least 40,000 bottles sold, based on the average review-to-sale multiplier for ecommerce businesses.
Some of the top sellers include Moscato d’Asti from Paolo Saracco, Brachetto d’Acqui from Il Falchetto, and Botrytis sweet wine from Saint-Croix-du-Mont. What is more surprising is that all of this has been achieved within two years. “We saw a gap in the sweet wine market, so we aim to fill it,” said the owner. “We specifically target the younger female consumer as they are less biased towards wine style.
Sweet wine seems like a no-brainer for them.” According to Yuan (who prefers to keep her full name private), this specialised online shop is already among the top 20 wine-related shops in Taobao.com, and during certain promotional periods it is so busy it vaults into the top 10.
“We have achieved almost tenfold in sales of Tokaji, as well as sizeable increase on Sauternes as well as Port,” said Jing Yuan, sales director of Asia for AXA Millésimes, which owns Disznókő from Tokaji, Château Suduiraut from Sauternes, and renowned estate Quinta do Noval in the Douro Valley. “We have noticed growth across all channels, but much of it has to be attributed to internet sales,” Jing continued. She admitted that the largest growth comes from the more entry-level sweet wine products such as Tokaji Late Harvest and Szamorodni, as well as Suduiraut’s second label, “but I have received much inquiry on certain vintage of Suduiraut as well as five and six puttonyos of Disznókő.”
When discussing internet channels, pricing used to be one of the major concerns for producers, but this seems less of an issue than it once was. “We are satisfied with the positioning of our wine in terms of price online,” said Jing.
Not everybody is experiencing a boom in sweet wine. “We are struggling,” admitted one of the executives from an influential importer. “Our customers are simply not into sweet wines.” This particular importer recently scaled down their sweet wine portfolio, which had consisted of some of the best producers of sweet wines from around the world.
Pricing may be one reason behind this, but what is more important is that the sales teams of some renowned importers are simply not equipped with the knowledge required to deal with this new group of online shops. “Service matters,” commented one of the online sweet wine shop owners. “They need to think in my shoes rather than throwing the tech sheet and award info [in] my face. It is not hard to find a replacement in any price bracket.”
But while entry-level sweet wines may be what’s driving growth, more premium products are benefiting as well. Pajzos Aszú Esszencia 2000 sold more than 48 bottles in 30 days recently. That’s quite an impressive number for a premium Botrytis sweet wine that retails at 1000 RMB. “Premium Port at mid-to-high price levels are leading our growth in China … One of the reasons being that our importer of Graham’s is particularly strong in working with ecommerce and other new media platforms,” said Sofia Zhang, the Chinese representative of Symington Family Estates.
The online market
It’s important to distinguish ecommerce from new media channels. In China, ecommerce refers to specialist or comprehensive websites that have a long-standing history of wine distribution. The most influential of these includes retailers such as JD.com, Taobao.com, Tmall.com, and Amazon. ‘New media’, on the other hand, refers to emerging channels that are based on WeChat public accounts, mobile websites, or apps. Typically they have only been in operation for two to three years, but while they are young, they can be very influential, particularly when it comes to younger consumers. The ENJOY and Red apps and Kaola.com are among the most prominent, along with a few key opinion leaders on the WeChat platform. “But Taobao is still by far the largest channel. It is definitely the trendsetter,” said a new media channel sales director from an importer of premium sweet wines.
Private label may seem an incongruous thing to be talking about when referring to quality sweet wine producers, particularly since there are still many private-label Bordeaux AOC and Spanish DO wines plaguing the market, often going for hundreds of dollars a bottle. However, many interviewed for this article agreed that private label could have a place. “It’s not about profiting on asymmetric information, but creating a product that fits [the] consumer’s need. Many producers simply do not offer a product like that,” said one. Another online shop owner complained, “Our customer is fond of Riesling, especially Auslese, but they prefer those vintages with less acidity but more ripeness.” The wine experts may find such wines unbalanced, but it is the preferred style for many consumers.
Is there a clear road to success if a quality sweet wine producer wants to take advantage of this opportunity? It turns out there might be. Several marketing companies have already emerged as being behind some of the most successful sweet wines sold online, but most of them prefer to stay anonymous and let the product do the talking.
Luckily, Mr Zhang – who also doesn’t want to share his full name – is behind some of the most popular sweet wines online and is willing to share a few thoughts on his trade secrets: “What is the young people’s first bottle of wine? I think it is definitely something sweet, and based on containers of wines that I sold over the years, 50 g/L is the sweet spot.” He adds that the wine has to be fruity, but with alcohol in the range of 9% to 10%. Others interviewed for this article said 60 g/L residual sugar is not too far off the sweet spot.
Once moderate success has been achieved online, many producers return to the traditional offline channels. “Go offline,” advised Zhang. “Even with huge numbers, online sales are like an advertisement or brand awareness tool. The real potential lies in the traditional distributors.” He says that if you price your wine online correctly and leave enough margin for the distributors, “they are more than happy to hop on the bandwagon.”
