Charles Carrard on wine distribution in China: Shifts, prospects, the “dumping ground” mindset, and more(1)
Charles Carrard is the director of north China for French Wine Paradox, which handles about 500 different wines in China, employs 200 people, and has its headquarters in Hangzhou and branches in Beijing, Guangzhou, Shanghai, and Shenzhen. I talked to him about the swiftly changing wine distribution market, the fastest growing wine niches, some of the company’s esoteric brands, and more.
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The scene for wine importers and distributors seems a bit tumultuous. What is happening?
We are finding that the business model created by the top wine importer in China does not work anymore. The idea of using cash sponsorships, of positioning your company to make money a few years down the line, and of building a strong presence in many cities is becoming a thing of the past. The reason is competition.
We previously saw a few big companies dominate the market, but now they have to fight many smaller companies that have good wine selections and lower operating costs. We also saw the big companies rely on the markets in Beijing, Shanghai, and Guangzhou, all of which are very different, but now medium-sized companies in individual cities are able to leverage their local expertise.
This makes it hard for the big companies to keep a grip across the country and they will have to focus on certain cities or areas rather than spreading their resources. This is especially true since a company often depends on one person in a particular market to be a driver, and if they lose that person, the result will be lowered revenues and damage to overall operations.
This does not mean all of the small companies are good. Many of them will close because they lack resources or the ability to drive sales, but new companies will arise and be a continual source of competition for bigger ones.
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Where will future growth in wine sales come in China?
Chilean wines offer both quality and price, and Chinese consumers like the taste. French wine remains very expensive. It may be affordable for the elite, but the average Chinese consumer is moving toward Chilean, and we already carry five brands - Santa Alvara, Veo Grande, Ribera Del Altiplano, Malakita, and Calama. Customers tend to know Shiraz and Cabernet Sauvignon more than Carmanere, so it’s our job to provide information about the lesser-known grape varieties.
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FWP is bringing in wines from some lesser-known regions of the world. Could you talk a bit about these?
Our portfolio includes wines from Bulgaria (Blueridge), Greece (Avra), Algeria, Morocco (Sidi Braïm), and Mexico (LA Cetto), and we will likely soon have more wines from Eastern Europe. Our belief is that wines from countries such as France and the United States are not the only good ones, but that each country has its own style. We do not sell a lot of these wines, but they do give our customers more choices.
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What would you say to claims China is a dumping ground for wines that can’t be sold elsewhere?
This was true with a lot of French wine in the beginning, especially with Bordeaux about ten years ago, although the same could be said about other countries, such as Australia. The attitude was that Chinese don’t know much about wine, so low-quality products could be sent here.
But now countries such as South Africa are able to produce good wine at a good price. At the same time, consumers are learning more about wine. They can use the Internet to check wines and prices. I have seen people in the wine aisle at Carrefour in Beijing call friends in the United States or France and ask if a particular bottle in the store is good value. We don’t see as much of the attitude, “If it’s French, I will buy it.” People are becoming much savvier.
