How to move upmarket, from entry-level wines to premium wines

Chile has staged what could be known as the greatest upset in Chinese wine market. Not only did the size of Chilean wine market exponentially expanded, but Chinese drinkers now are uncorking more bottles of iconic Chilean wines than ever. Arguments can be made that Chilean wine exports to China were historically driven by bulk, and it’s not uncommon to see Chinese producers mixing Chilean wines with local wine.

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Twenty years ago, Chilean exports focused mainly on great red wines from the central valley, today you can find all type of grape varieties from different wine regions, with different geographic characteristics, growing processes and production techniques. Chilean wines have evolved. Between 2017 and 2021, a premiumisation trend is taking hold. Not only did the size of Chilean wine market exponentially expanded, but Chinese drinkers now are uncorking more bottles of iconic Chilean wines than ever.

A framework ready for a long time

The absence of tariffs helps. Since Chile signed a trade deal with China in 2006, the value of its wine exports to that country has rocketed from $5m to $250m in 2019. Another factor is Chile’s ability to make wine that is specially branded and packaged for the Chinese market, known in the trade as “private-label” wine. This requires not only good wine, but also impeccable labelling and bottling: the drink is often given as a gift, so it has to look impressive.

A fantastic opportunity

In 2021, coming off a pandemic-hit year, Chile’s premium sector growth gained an extra edge, as merchants are eager to find quality wines to replace Australian wines, which had previously taken up 40% of China’s imported wine market.

Riding on the upmarket growth momentum and perhaps what could be described as once-in-a-lifetime opportunity when Australia, China’s former top wine supplier was essentially squeezed out of the market due to the crippling 218% anti-dumping tariff, Chile did not waste time and pounced at the opportunity.

Repositioning the wines

Explaining on the rise of Chilean premium wines, Nicolai Samsing, Asia Director of Wines of Chile (replacing Julio Alonso in 2019), credited the wine trade association’s early emphasis on quality and international wine critics’ commendation as well for driving the growth. “Chilean icon wines have had a great reputation in China, this reputation was confirmed in 2017 when three of top Chilean wines were awarded 100 points by James Suckling, and of course it has helped to uplift Chile’s whole wine category image,” he expands.

Wines of Chile hosted Evolution 92+, an event that aims to showcase top Chilean wines that are rated 92 points or above by international wine critics and publications such as Wine Spectator, Wine Advocate and James Suckling to Chinese trade and consumers in Shenzhen and Shanghai.  And the market responded warmly. The event proved to be a huge success. Despite recent Covid surges that has now spread to some 20 Chinese cities, a total of 45 wineries and over 300 people attended the event’s masterclasses in Shenzhen and Shanghai, led by Fongyee Walker MW, Julien Boulard MW, and Lu Yang MS.

The event itself is a step-up from the association’s previous event series called 90+ events in terms of scores, and as Nicolai Samsing says is a reflection of Chilean wine’s quality evolution as well. “This year we think that Chilean wine are prepared to jump to 92+, after quantitative research we understand that all Chilean wine exporters have more than one 92 points or above labels available in China market already,” explains Nicolai Samsing.

The tasting attracted over 600 wine professionals and lovers in Shenzhen, and another 500 participants in Shanghai.

Ultra-premium Chilean wines

Since this year we have noticed how the premium wine segment (above US$60 FOB per 9 liters case) has been growing, currently reaching 30% of our total exports to China,” says Nicolai Samsing. To put it in context, this represents a 7% growth compared with pre-Covid market in 2019.

According to data from Intelvid, sales of ultra-premium Chilean wines, which are exported at least of US$400 a case FOB, emerged as a growth engine for Chilean fine wine in China. This ultra-premium category is forecast to reach US$22 million by the end of 2021, which would account for 8% of all Chilean wine exports to China.

This means that the size of the ultra-premium sector would more than double 2020’s US$12 million and more impressively, quintuple pre-covid 2019’s US$5 million for the same premium category.

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Speaking of Chilean wine’s premiumisation, Samsing enthused, “[This is] a huge achievement from our exporters. It´s clear how fast the luxury goods market has been booming in China the last years, and we see how fine wines have followed this trend that will keep developing more and more not only on tier 1 cities, also in fast developing cities along the country.”

The number of wineries exporting US$400 or above a case to China have grown to 28, according to Wines of Chile.

WeChat, Sina Weibo, Douyin and TikTok

Going into 2022, the association will roll out constant and consistent promotions both online and offline. Leveraging on China’s powerful and omnipresent social media platforms, the association will incorporate more livestreaming for events and develop WeChat mini-program for winery directory and information to facilitate business contacts.

The association is active on three main Chinese social media platforms, namely WeChat, Sina Weibo, Douyin and TikTok. All the content is prepared in China, in Chinese language for Chinese people. Each platform serves a different purpose to reach targeted audience. While WeChat is directed at B2B professionals, its Weibo messaging is more consumer-oriented and Douyin is particularly effective in communicating to young consumers.