Research into gaining access to vast China market

PULLMAN - American winemakers will have to hustle in China to compete against the prestige of Old World wines. That conclusion is derived from research by economists at Washington State University.
 
Jill McCluskey, professor in the School of Economic Sciences, used auctions to understand Chinese consumers’ preferences for wine from China, France, Australia and the United States.
 
“The purpose of these auctions was to understand how information and country of origin affect how much Chinese consumers are willing to pay for imported wines, including U.S. wines,” she said.
 
In 2010 China was the largest wine importer in the world, according to the Bordeaux Wine Council. In 2008, Chinese per capita consumption was 1.08 liters, compared to 9.68 liters in the United States and 53.22 liters in France.
 
From their experimental auctions, McCluskey and graduate student assistant Hainan Wang noticed a couple trends. 
 
“Participants were willing to pay more for ‘old world’ wines from France than for ‘new world’ wines from the United States and Australia or for domestic wines from China,” McCluskey said. “With the younger participants, we saw a greater willingness to pay more for wine products from China and the United States.”
 
The weekend wine auctions were conducted in 2009 in seven Chinese communities and three universities in Beijing and Shanghai. In total, 195 residents and 228 students participated.
 
McCluskey and Wang said household income had a positive effect on a consumer’s bid for wine while there was no evidence that gender had any effect.
 
Wine is being marketed mainly in urban supermarkets in China, according to McCluskey. Wine is both marketed and consumed differently than most Americans are used to.
 
“I have seen importer-marketed boxed gift sets with two bottles of wine with a western necktie,” McCluskey said. “It is also very popular in China to dilute wine with soft drinks.” She recalled a saying from an article in The New Yorker that is popular in China: “Red wine and Sprite: the more you drink, the sweeter you’ll be.”
 
As to how U.S. wines can get more shelf space in Chinese urban supermarkets, McCluskey suggested sending sales representatives to China to develop solid relationships with particular retailers.