How To Start A Wine Business In China(2)
Besides help with paperwork, Duckhorn and Richardson have received help from their Chinese partners in choosing wines to sell. "Red by far dominates the book," said Duckhorn. Men especially like the stronger flavor. Once customers pick a color,, the business is "more price-point driven than varietal," he said. Entry prices start at 100 yuan ($14.70), mid-range prices are 200-450 yuan, and higher prices can be as much as 2,000 yuan a bottle.
"We once had a customer who asked about our most expensive wines, and we said, '1,000 to 2000 yuan.' And they said, 'That's not expensive enough.' So we said, 'We can make it more expensive if you like,'" chuckled Richardson. Once the pricing is set, customers look for help with varieties.
Ironically, once you have a business license, Duckhorn said, it's easier to sell wine in China than the U.S., where tied-house laws limit sales across state lines and with certain customers. "Here, if you get the right license, you can pretty much sell to whoever you want and sell anywhere. And that's a huge, huge difference in the mindset of someone coming from the U.S. alcohol trade to the Chinese alcohol trade." Although China's is hence more efficient, taxes are much higher than in the U.S.--about 50% per bottle, forcing Via to store inventory in tax-free Macau until it's ready to ship into China.
One promising segment for wine in China is the gift market, Richardson said. "Bars and clubs are huge, though price sensitive and relationship-driven," he added. Emerging upscale restaurant chains also have good potential.
Yet the sheer size of China's wealth and population beyond Beijing and Shanghai seemed to leave Duckhorn as optimistic as much as any marketing details. "It's kind of like the States, where you have Washington and New York, and a large market beyond. We haven't even scratched the surface. But it's the same story."
