The More You Drink, the Sweeter You’ll Be: WSU Economists Investigate Chinese Wine Consumer Preferences
Many American winemakers would love to break into the Chinese market but they’ll have to hustle to compete against the prestige of Old World wines. That conclusion is derived from research conducted by economists at Washington State University.
Jill McCluskey, a professor in WSU’s School of Economic Sciences, said the research used auctions in order 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,” McCluskey said.
According to the Bordeaux Wine Council, in 2010 China was the largest wine importer in the world. In 2008, Chinese per capita consumption was 1.08 liters, compared to annual per capita consumption of 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. “The participants were willing to pay more for ‘old world’ wines from France than for ‘new world’ wines from United States and Australia or for domestic wines from China,” McCluskey said. “It was with the younger participants, where 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 different Chinese communities and three universities in Beijing and Shanghai. In total, 195 residents and 228 students participated in the economic experiments.
“Generally, the resident participants exhibited higher bids than college students for all of the four wine products in the auctions,” McCluskey said. The four types of wine used in the auctions were Dragon Seal, a domestic Chinese wine; Chateau Saint Pierre, from the United States; and Chateau Marot Bellevue from France. All three wines are made from Cabernet Sauvignon grapes. The fourth wine was an Australian Shiraz-Cabernet blend made by Lindemans. All four types of wine were purchased at grocery stores in Beijing and Shanghai.
McCluskey and Wang said that household income had a positive effect on a consumer’s bid for wine while there was no evidence that gender had any effect on the participants’ wine bids. Currently, 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 that come 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 some more shelf space in Chinese urban supermarkets, McCluskey suggests sending sales representatives to China so they can develop a solid relationship with retailers.
McCluskey’s research received funding from the WSU Impact Center.
by Chelsea Low, WSU CAHNRS Marketing, News, and Educational Communications news writing intern
Learn more about McCluskey’s research by visiting http://bit.ly/gzCwLS.
U.S. Drinks the Most Wine
Speaking of consumer wine preferences, the U.S. recently became the world’s No. 1 wine consumer. According to a recent report commissioned by the U.S. Wine Institute, “The U.S. surpassed France as the world’s largest wine-consuming nation in 2010, with wine shipments to the U.S. from California, other states and foreign producers growing 2 percent from the previous year to nearly 330 million cases, a record high for the industry. The estimated retail value of these sales was $30 billion, up 4 percent from 2009. Total French consumption was 320.6 million cases in 2010.
“U.S. wine market conditions remain highly competitive, but we are optimistic that this growth trend will continue. Americans are increasingly interested in a lifestyle with wine and food, demonstrated by the presence of wineries in all 50 states and 17 consecutive years of growth in U.S. wine consumption,” said Robert P. “Bobby” Koch, president and CEO of Wine Institute.
In 2010, U.S. wine exports, 90 percent of which are from California, jumped 25.6 percent in value to an estimated $1.14 billion in winery revenues. Volume shipments rose 1.9 percent to 47.3 million nine-liter cases, according to U.S. Department of Commerce data. U.S. wine export volume has nearly doubled in the last decade.
Thirty-eight percent of U.S. wine exports by value were shipped to the 27-member countries of the European Union, accounting for $435 million of the revenues, up 14 percent from 2009. Volume shipments to the EU reached 27.6 million cases in 2010, up 11 percent from the previous year. Changes in the dollar exchange rate, a gradually recovering economy and California’s effective marketing and high wine quality have helped exports rebound. Other top markets were: Canada, $308 million; Hong Kong, $116 million; Japan, $76 million; and China, $45 million.
This article is excerpted from a press release from the Wine Institute; read the complete release at http://bit.ly/eGMp63.
Upcoming Wine Sensory Workshops
WSU faculty will present two sensory workshops on Aug. 24 and 25 to wine professionals and consumers interested in gaining practical training in wine evaluation.
The Aug. 24 workshop, Basic Palate Training, is designed for those looking to advance their knowledge of wine sensory evaluation. Dr. Carolyn Ross will present exercises and techniques used to evaluate the various attributes of a quality wine. Wine attributes include wine appearance, aroma, taste, and more.
On Aug. 25, faculty will present the Advanced Sensory Workshop and discuss wine aroma and taste compounds. Participants will be presented with a range of aroma and taste compounds at various concentrations to demonstrate the variety of sensory thresholds. By the end of the workshop participants will be more aware of their individual aroma and taste sensitivity.
The Advanced Sensory Workshop will be presented by Drs. Carolyn Ross, Thomas Henick-Kling, and Richard Larsen.
Initially presented in 2010, the sensory workshops have been in high demand since then. “To my knowledge, no one else is doing this kind of educational outreach for their wine industry,” said Thomas Henick-Kling, director of WSU’s research and education program in viticulture and enology.
“I thought it was very good,” said Lewiston farmer Art McIntosh of the workshops. “I am hoping they will do another one with even more sensory materials.”
Chinook Winery’s Brian and Lindsey Mackey both took the workshops, and Brian said, “The workshop was well presented and definitely teaches you a lot about compounds in wine. It presented things very scientifically.”
Lori Kennedy, a partner in Don Carlo Vineyard with her husband Tim (known for Tim’s Cascade Chips), said she recommends the workshop for its excellent information content.
- Basic Palate Training, Aug 24: $40; 1 to 4 p.m.
- Advanced Sensory Workshop, Aug 25: $90; 8 a.m. to 4 p.m.
Both events will be held at WSU Tri-Cities, Consolidated Information Center, Room 120. See map for directions http://bit.ly/hvxK2T. Register now by contacting Debbie Schwenson at 509-372-7224or by e-mail at schwenso@wsu.edu.
by Kacie McPartland, WSU CAHNRS Marketing, News, and Educational Communications news writing intern
Learn more about food and sensory science at WSU by visiting http://bit.ly/gWXCmY.