Hi All! Newly a Stage 1 MW student as of last Monday, and hoping to join the conversation here weekly. Thank you Sarah Bray, Sabrina Lueck, and Kelli White for bringing your studies public!!
Very happy you chose this topic. On my entrance exam, I was given the 2017 question as an option (which I quickly ruled out, and opted for one on vine pests and diseases). I want to say, the question they asked me, though, was about a 500,000 case/year brand. Which leads me to one of my questions here. How should that portion of the question inform your response? How might a a 1 million vs half million case/year vs much smaller enterprise strategize differently when it comes to the Chinese market? How would that affect importation and distribution channels? DTC sales/target markets? With one million cases/year being high production, would you make any assumptions about your product itself? Would you presume you have lower priced wines that could reach a larger audience?
Obviously completely new to the program here, and just getting my feet wet - but questions like these terrify me! Excited to see you breaking them down here.
Hi! Thanks for jumping in! I think you're getting a little into the weeds here. A 500,000 case/year brand is going to pursue similar strategies in many ways to 1 million (versus a 8,000 case brand, like one I represent, which is going to have more of a niche approach and without the deep pockets of larger brands). Price point matters as well, as well as the fact that, while you'd want to increase your presence in a market with such potential, you're not selling 1 million cases in one market. So for the purposes of answering your other questions, I'm going to speak about volume brands and niche brands.
1. How should that portion of the question inform your response? With one million cases/year being high production, would you make any assumptions about your product itself? Would you presume you have lower priced wines that could reach a larger audience? Absolutely. There's likely to be a broad range of SKUs in such a portfolio, with drivers at low price points. Given standard tax rates of about 48% (this includes import duties/VAT/consumption taxes, excluding the countries I've explicitly highlighted), volume brands with lower price points may have the ability to have a broader reach to the growing population of middle class drinkers looking for wines to consume in a daily capacity (v. gifting).
2. How might a a 1 million vs half million case/year vs much smaller enterprise strategize differently when it comes to the Chinese market? How would that affect importation and distribution channels? DTC sales/target markets? Here, I'd bring into the discussion an understanding of national (Summergate) v. regional (RubyRed) distribution partners, as well as show an awareness of how product for import brands moves: 67% on premise; 32% off premise with half of that in supermarkets, important for a volume brand; the rest online via large portals like Alibaba and Tmall where you can, with marketing dollars that a volume brand would likely have pay for a digital storefront (Yellowtail has done this for example), to other smaller sites like 1919.cn for niche brands – DTC has a broader definition in this case than direct from wineryGus Zhu's point, there's no 3-tier system in China.
You could also choose to identify within your scope your point of origin as export manager, bringing in statistics about what sells well (98% of sales are red wines; 45% imported wines are French, with travel driving increased interest about wines of other countries like Italy where sales of Piedmont and Tuscan wines dominate).
I'll dive into my approach at the end of the week, but I think a SWOT structure is a strong way of approaching this kind of question.