1. Targeted Business for foreign companies WINE INDUSTRY IN CHINA : THE CASE OF Ismail MAACHOU François MEGRET

2. Introduction : Chinese wine market 400 wine producers in china 400 wine producers in china China the 10th wine producer in the world China the 10th wine producer in the world The chinese leaders companies: -Changyu -Great Wall - Tonghua - Dynasty The chinese leaders companies: -Changyu -Great Wall - Tonghua - Dynasty

3. Chinese wine market Chinese wine market -Wine represents only 1.3% of the total of alcoholic’s drinks in china - The top 5 producing regions in china

4. Chinese wine importations Increasing chinese wine importation. Increasing chinese wine importation. Reduction of import tarifs and taxes. Reduction of import tarifs and taxes.

5. I. Company Presentation Roqueta Origen S.L. is family owned group of spanish high quality wineries. Roqueta Origen S.L. is family owned group of spanish high quality wineries. Roqueta Origen owns 4 brands witch are: Roqueta Origen owns 4 brands witch are: Turnover: 28 million euros.

6. Turnover Repartition per company (%) 28,57 % 42,85 % 27,5 % 1,08 %

7. II. Competitive presentation 1) Who are the customers ? ROQUETA ORIGEN is a WINE PRODUCER ROQUETA ORIGEN only deals with IMPORTERS

8. confidential R.O. IMPORTERS Whole Salers END USER CONSUMER 50 fragmented (1M cols = 600K/1000K end users) 1) Who are the customers ? 150 fragmented (restaurants, supermarkets..) confidential sell

9. 2) Who are the suppliers ? ROQUETA ORIGEN is a WINE PRODUCER is a RAW MATERIAL PRODUCER has NO SUPPLIERS for wine production Their annual wine production is 25 Million Cols/year. - Bottle of wine producers - Cork local producers - Logistics : Transportation (CIF : Cost, Insurance & Freight) Minimize their dependance :

10. 3) Who are the competitors ? 400 Chinese wine producers 100 big ones Dominated by 4 companies

11. 3) Who are the competitors ? VALUE MARKET SHARES (%) CHANGYU20 GREAT WALL 17,3 TONGHUA14 DYNASTY10 OTHERS (Powerful Dragon, Suntime, Red Yunan, Sensations, TongHuaGanHong, Dragon Seal, Shangri La) 38,7 TOTAL100 Source : Comtrade (données 2009) http://www.suddefrance-export.com/fr/fiches-pays/chine/vin/importation-de-vin

12. 3) Who are the competitors ? Values (millions usd) Importations shares (%) FRANCE197,1843,11 AUSTRALIA97,0321,21 CHILE55,0112,03 UNITED-STATES25,715,62 ITALIA25,275,53 Others57,1712,50 Total457,37100,00 Source : Comtrade (données 2009) http://www.suddefrance-export.com/fr/fiches-pays/chine/vin/importation-de-vin Volumes (millions Litres) Importations shares (%) CHILE49,6028,69 FRANCE44,5325,76 AUSTRALIA38,0722,02 UNITED-STATES9,955,76 SPAIN8,364,84 Others22,3712,93 Total172,88100,00

13. Source : Comtrade (données 2009) http://www.suddefrance-export.com/fr/fiches-pays/chine/vin/importation-de-vin IMPORTATION MARKET SHARES IN VOLUME (%)

14. 4) What are the key success Factors of the wine industry in china ? Good quality of foreign wine Good quality of foreign wine Reduction of import tarifs and taxes Reduction of import tarifs and taxes Wine is seen as classy and sophisticated Wine is seen as classy and sophisticated Growing upper and midle class in china Growing upper and midle class in china Brand image (reputation) Brand image (reputation)

15. 5) How ROQUETA ORIGEN mastered those KeySuccessFactors ? Roqueta oregen target a large population from the middle class until the upper class : bottle prices vary from 1 euro until 20 euro Very good relationship with clients Promot the european image trought traditional labels. Increase of Roqueta Origen wine distribution in China since 2008 (increase in the turnover of 4,5%) CompetitiveAdvantage

16. III. Specific issue related to Wine Business in China : How to deal with Chinese consumers ? 1) Political Background In 1987 the chinese governement encourage the Chinese people to drink grape wine IMMEDIATE REACTION FROM CUSTOMERS : Consumption went up to 2,5% Red wine Consumption went up to 1,8% White,Yellow wine

17. 2) Historical Background (206 B.C.): wine was precious used only in sacred temple rituals and in the palace of the Emperor (206 B.C.): wine was precious used only in sacred temple rituals and in the palace of the Emperor 17 Century chinese start to produce and consume wine 17 Century chinese start to produce and consume wine 1980: first imported wine ( French) 1980: first imported wine ( French) 2000: thanks to the economic boom, introduction of foreign wines in the chinese market 2000: thanks to the economic boom, introduction of foreign wines in the chinese market Through & during all this study,questions asked, research, let’s talk about the Chinese consumer behavior :

18. 3) Chinese Consumer Behavior Advertisment Health Target Young Consumer (stay at home, salary for own spendings) Brand reputation

19. Seasonality Gifts (KTV, Affaires meetings, Hotels) Red wine symbols : Happiness, Chance & Love Local wine preferred 3) Chinese Consumer Behavior

20. 4) How to push chinese customers to consume more foreign wines ? Use Demographic / Economic context : Develop a MIDDLE CLASS wine 1) Redirect the consumption of red wine to more sweety wines : White & Rosé WHICH ONE ? 2) Create a new wine

21. STARTING POINT to incitate higher class wines consumption... Low/middle price (less than red wine) Enhance health good action effect (label) More sweety wine : White/rosé wine What’s the futur successful foreign wine in CHINA Good Communication about Healthy/Sweety/Cheaper Red wine : - Com. in supermarkets (kakémono) - com. in restaurants - launch a new trend regarding the middle class

22. Chinese customers behavior is either based on symbol (foreign wines) & taste (local wines) The aim for foreign wine companies is to combine the both. Foreign wine market shares in china began to grow after asian crisis in 2002 and will continue to increase with nice a nice products marketing. If you need to remember 2 things about our presentation : It’s not this picture :

23. Thank You ! Feel FREE to ask any question you have ! &

24. Sources - COMTRADE (données 2009) - http://www.suddefrance-export.com/fr/fiches-pays/chine/vin/importation-de-vin http://www.suddefrance-export.com/fr/fiches-pays/chine/vin/importation-de-vin - www.wineeducation.com www.wineeducation.com - www.chinadaily.com - www.CHIFF.com www.CHIFF.com www.CHIFF.com - - www.news.bbc.co.uk - - www.roquetaorigen.com www.roquetaor - www.linkedin.com inkedin.com - Fré- Frédéric Bongard, Sales director of Roqueta Origen ASIA PACIFIC. irector of Roqueta Or - Fréirector of Roqueta Or