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Winemaker cracks tough Chinese market

Jun 17 2012 15:40
Hennie Duvenhage

Cape Town - It's tough to get into the Chinese wine industry, but those who manage to do so find themselves in a world of unprecedented opportunity.

Hein Koegelenberg of Leopard’s Leap and La Motte in the Franschhoek Valley got a foot in the door and in the current year has exported 2.8 million bottles of wine to China, about 60% of South Africa’s total wine exported to China.

But it hasn’t been easy, because there are great differences between the South African and Chinese wine markets. In particular, the personal involvement of wine producers is important in China.

About five years ago Koegelenberg realised that the American economy was running out of steam and he decided instead to apply his money and energy to try to get into Asia’s wine market.

The first step was to find a reliable and capable agent. Expert advice made him realise that, unlike in the case of American and European agents, he needed to spend time with his Chinese agent, because to the Chinese good relations are highly significant

He then had to decide which marketing channels to use, because it is difficult to get into the traditional retailer and off-sales channels.

Wine producers can also focus on hotel groups, tax-free zones like Hong Kong and international airports, of which there are more than 120 in China. There are also direct channels, through which agents supply wine direct to consumers.

Koegelenberg entered into an agreement with an agent, Aussino World Wines, which has 235 wine shops. His wine is the only South African brand on show among the world’s best.

Koegelenberg also signed an agreement with the Chinese University Alumni Association in Beijing. Around 30 000 chief executives of Chinese companies are members, 40 of whom come to South Africa every quarter. Koegelenberg then has to entertain them.

He has also established a joint venture, Perfect Wines of South Africa, with the Chinese company Perfect China, which markets their mutual product, L’Huguenot, in China. Perfect China has 5 000 depots with more than a million agents selling wine directly.

Chenin blanc would appear to be the leading imported white wine, as it goes well with the fish dishes preferred by many Chinese. More red wine is however consumed and the L’Huguenot’s label is found on shiraz wines and shiraz-pinotage blends.

Wine is popular for gifts. There are four opportunities during the year when gifts are given to others, family members, employees and suppliers.

Koegelenberg says it's not a good idea to give a parcel of three bottles of wine as a gift to anyone in Northern China, because three items means you want to end the relationship.

He says it's important to understand the Chinese culture and become familiar with the translations of wine names, as they can convey meanings unlike those of the original Afrikaans.

Next year he wants to bring a group of 800 Chinese to South Africa as part of his client-reward scheme, a practice that is also part of Chinese culture.

“We are busy translating a Cape Wine Academy course into Mandarin,” says Koegelenberg. “From next month our winemaker will present it in China for three weeks.

"We envisage exposing 100 Chinese people to South African wines every two days.”

Koegelenberg is also involved in marketing South Africa and its wines in China.

 - Sake24

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