Study of Chinese Wine Consumption Essay Example for Free

Study of Chinese Wine Consumption Essay Abstract Purpose  ± This research aims to examine Chinese consumers wine consumption and purchasing behaviour. Design/methodology/approach  ± The study, conducted during the Chinese New Year in early 2006, used in-depth interviews with 15 consumers in Guangzhou, Peoples Republic of China. Findings  ± The results suggest that Chinese consume Chinese spirits for all occasions, yet consume red wine only for special occasions such as Chinese new year and other holidays. A key point for selling red wine to the Chinese is its positive image; drinking red wine is considered trendy and shows good taste. Another key point is consumer perceptions of red wine as healthier than Chinese spirits because wine contains less alcohol. Two other findings are that most Chinese consumers assume all wine is red wine and have little wine knowledge. Most respondents did not know of white wine or that Australia produces wine. Finally, Chinas culture of face value, mianzi, plays a key role in purchasing and consuming wine. Chinese tend to purchase inexpensive wine for private consumption and public occasions, yielding more mianzi in front of others. In some important occasions, consumers will purchase a foreign (French) red wine to impress their guests and obtain even more mianzi. In most situations, Chinese purchase and consume wine for perceived health and symbolic  ± lucky or good face  ± values. Research limitations/implications  ± The small sample size is a limitation. Another limitation is that all the respondents lived in the urban area of Guangzhou, one of Chinas most developed cities. The findings do not generalize to China. Practical implications  ± The findings suggest that wine is a symbolic product rather than a necessity product in China; therefore, image is an important attribute for selling wine in China. Furthermore, limited wine knowledge tends to make Chinese consumers rely heavily on price for their wine purchasing decisions, as price relates to mainzi. Chinese consumers high awareness of France as a wine making country and their deep-rooted positive beliefs about French wines pose difficulties for marketing other foreign wines, such as Australian wines, in China. Originality/value  ± This is perhaps the first academic study in English of Chinese wine consumption and wine purchasing. It offers important insights on the characteristics of wine consumption and purchasing in China. Keywords Consumers, Consumption, China, Wines, Red wines Paper type Research paper 98 Fang Liu and Jamie Murphy International Journal of Wine Business Research Vol. 19 No. 2, 2007 pp. 98-113 # Emerald Group Publishing Limited 1751-1062 DOI 10. 1108/17511060710758669. Introduction Chinese wine production has grown dramatically since the 1980s, with an average annual increase of 14 per cent from 80,000 tons in 1980 to 440,000 tons in 2005 (ASKCI, 2005; Snapshot, 2005; see Figure 1). Wine consumption has risen alongside the wine production. From 2004 to 2005, Chinese wine consumption reached 420,000 tons  ± 564 million bottles, which brought China into the top ten wine consumption countries (Foodmate, 2007). From 2005 to 2010, Foodmate (2007) estimates that Chinese wine Chinese wine consumption 99 Wine production in China (1980-2005) Figure 1. consumption should increase by 35 per cent, or six times the worlds overall increase in wine consumption. Chinas per capita wine consumption of under 0. 5 litres is markedly less than the world average of 7. 5 litres, and 40 times less than the 20 litres drunk in western countries such as France, Australia, and the USA ( Jin, 2004). For the past 10 years, Chinese wine consumption increased from 10-15 per cent annually, grew 20 per cent in 2005, and this strong growth should continue for the foreseeable future ( Jin and Zhan, 2006). Chinas current low per capita wine consumption, augmented by the worlds largest population (1.25 billion) and decades of 7-8 per cent annual GDP growth (NBS China, 2004) has foreign wineries keen for a share of this market. In addition, a reduced wine import duty and the Chinese governments preferential policy for foreign wines further entice foreign wineries into China (SinoCast China Business Daily News, 2002). Foreign wines, particularly from France, the USA, and Australia, are pouring into China (He, 2004). From January to February 2006, China imported around 18 million litres of wine valued at E14 million, and its annual wine imports increased 79 per cent in 2005 (Worldbydata, 2006). Chinas wine market is also becoming competitive, with many local and foreign brands available (Tang, 2005). Despite its huge market potential, academic knowledge about Chinese consumers wine consumption and purchases is scarce. This paper reviews literature on Chinese wine consumption and then discusses the results of qualitative interviews conducted in early 2006 in Guangzhou, China. The paper closes with managerial suggestions for exporting wine into China and proposed avenues for future research. Chinas wine history China has a rich wine history. Towards the beginning of the Han Dynasty, around 206 BC, Chinese started to grow grapes and produce wines in the Yellow River region of northeastern China (Winechina, 2005). Grape wine production, however, lagged other alcoholic beverages such as Chinese spirits due to weather and soil conditions. During IJWBR 19,2 100 the Tang Dynasty, about 500 AD, there was still little Chinese wine production and China began importing wines, mainly from the Middle East. Due to its scarcity, only emperors, senior government officials, and rich merchants drank wine  ± usually for important occasions such as the emperors birthday (Winechina, 2005). Chinese spirits are alcoholic beverages distilled from grains and have been the traditional drink for nearly all occasions in China. Furthermore, due to historical and cultural reasons, wine has never gained the same popularity as rice spirits or beer (Li, 2006); tradition still influences who drinks wine and on what occasion. Wine is both a luxury and image product in China. Chinese who drink wine are usually educated, wealthy, and middle or upper class (Wang, 2006). Demographics aside, many Chinese consume wine for important social or business occasions (Tang, 2006b). Wine has a favourable image in China, but most Chinese have little wine knowledge or appreciation, such as judging wine quality or taste ( Jin, 2004). Macro-factors also hinder Chinas wine market. For example, few guidelines for wine advertising have led to many wine advertisements providing exaggerated or false information (Peoplenet, 2006). Yet, despite Chinas rich wine history and growing wine consumption, few studies have examined Chinese wine consumption and wine purchasing. The next section describes a qualitative study to help bridge this research gap of Chinese consumers attitudes towards wine. Research methodology Due to the complex topic and limited literature of Chinese consumers wine purchasing behaviour, this study adopted a qualitative method (Morse, 1994). Scholars often use qualitative methods in organizational and consumer research in order to help understand complex issues that may not be immediately implicit in surface responses (Goulding, 2005, p. 301). Furthermore, the qualitative approach is particularly apt for experiences such as consumption (Goulding, 2005, p. 303). This study investigated Chinese consumers thoughts associated with wine, wine drinking, and wine purchasing. The major research questions were: (1) when and where Chinese consume wine; (2) how frequently they drink wine; (3) how much they drink per occasion; and (4) what factors influence their wine purchasing. For a qualitative approach, this study used in-depth interviews and a semi-structured questionnaire of open-ended questions. Data collection All interviewees were friends of the researcher and thus inclined to discuss frankly and openly their attitudes towards wine. Interviewing friends is common in qualitative studies as friends will accept the interview as well as share intimate thoughts (Frankel and Devers, 2000; Pottie and Sumarah,2004). The criteria for selecting interviewees were availability, that they had consumed wine, and represented a balanced crosssection of age, gender, and income. Table I profiles the nine male and six female interviewees. Four interviewees were in their 20s, four in their 30s, five in their 40s, and two in their 50s. Defining Chinese income levels is difficult; different areas have different income levels and income disparity is a serious problem (Zhou, 2006). Chinas average ID A B C D Gender Male Male Male Male Age 33 24 42 23. Highest education University University Senior high New Zealand university Collegea Senior high University freshman University Senior high College Junior high Senior high Income Median Low High Median Occupation Marketing executive Engineer assistant Restaurant owner Bank customer service officer Washing business owner Small business owner University student Retired senior executive Working in a beauty shop Airline middle management Housewife Retired government official Lecturer Entrepreneur Account manager Marital status Married with one child Single Married with two children Single. Overseas travel None None HK and Singapore Studied in New Zealand; visited Australia. None HK None Holland, South Korea and a few others None Holland, Japan, Malaysia and HK None HK, Singapore, Thailand, Australia and a few others HK and Australia None HK Chinese wine consumption 101 E F G H I J K L Male Male Male Male Female Female Female Female 43 44 19 60 40 25 40 58 High High Low Median Median Low Low Median Married with one child Married with one child Single Married with one child Married with one child Single Married with one son Married with two adult children Married with one child Married with two children Single. M N O Female Male Male 30 35 34 University High school University Median High Median Notes: aCollege degree, da zhuan, is a three-year degree. A university degree, da xue, is four years. In China, the bachelor degree is four years and a three-year degree is not a bachelor. A four-year degree is much more valued than a three-year degree Interviewee profiles Table I. personal income per month is around E40, but E120 in Guangdong, Shanghai, and a few other developed areas. Even within the same area such as Guangdong, people in urban areas could earn approximately four times as much (E480) as people living in the rural areas. Thus, differentiating low and middle income depends on developed or less developed areas as well as rural or urban areas (Sina, 2006). As the interviews took place in an urban area of Guangzhou, the capital of Guangdong and one of Chinas most prosperous cities (NBS China, 2004), this study IJWBR 19,2 102 classified four subjects earning E530 as high income. Regarding education, nine subjects had or were studying towards a university degree and six had a high school diploma. The profiles show that the sample has good coverage in gender, age, income, and education level. The researcher  ± a Chinese from Guangzhou, conducted and taped one hour indepth interviews in Chinas official language, Mandarin. The interviews occurred from 29 January to 12 February 2006, during the Chinese New Year, an official holiday of about two weeks. Choosing this festive period for interviewing had three advantages. Interviewees are generally in a good mood and less concerned with the time spent on an interview. Finally, during Chinese New Year, Chinese have banquets with friends, colleagues, and family once or twice a day and usually drink alcoholic beverages when eating. Interviewees were comfortable and less inhibited answering questions related to wine and other alcoholic drinks. Data analyses Transcribing and analysing the taped interviews reinforced and clarified the interview notes. Furthermore, after reviewing the initial narratives, the researcher returned to some interviewees for a follow-up interview and clarifications (Colaizzi, 1978). General findings follow. Wine means red wine When the researcher asked have you tried wine, pu tao jiu, ten interviewees instantly asked do you mean red wine, or ni shi shuo hong pu tao jiu ma? After the researcher explained that wine could be red or white, they said they knew and had drunk only red wine. They never tried nor knew about white wine. In their minds, there were four types of alcoholic drinks: hong jiu or red wine, pi jiu or beer, bai jiu or Chinese spirits, and yang jiu or foreign spirits. Similarly, Fu (2004) noted that most Chinese think red wine represents the entire wine category. Of the five interviewees who knew both red wine and white wine, D and H mostly drank red wine, as it was more available in the market. A and C mostly drank red wines, albeit for a different reason; red is a lucky colour in the Chinese culture. The other subject, J, also drank more red wine due to availability, but she preferred white wines as they were sweeter. She added that companies should promote white wine much more aggressively in China. These results suggest that Chinese have poor general knowledge about wine; twothirds of the interviewees were unaware of white wine. White wine may be less popular because it does not fit Chinese culture. Red is a lucky colour, associated with good things such as weddings and birthdays. White is an unlucky colour, often associated with funerals. Besides the lucky association, Fu (2004) argued that red wine sold better in China as it has a stronger taste than white wine; the Chinese prefer strong taste. Given the low awareness of white wine, the following section discusses Chinese consumers attitudes towards red wine only (see Table II). Chinese attitudes associated with red wine When asked about thoughts associated with red wine, all 15 interviewees began with differences between red wine and Chinese spirits. Later, interviewees B and I compared red wine with beer and J compared red wine with foreign spirits. In these Chinese Thoughts Choosing red wine or Chinese spirits depends on the occasion Red wine is less strong and thus healthier than Chinese spirits Red wine has positive symbolic meaning (e. g. lucky and prosperous) Red wine is particularly good for occasions such as spring festivals or celebrating good things Drinking red wine indicates good social image People drinking red wine cares about their face or image Drinking wine is more elegant and gracious than drinking Chinese spirits Red wine is particularly good for occasions such as banquets with important guan xi hu. Chinese know much less about wine, than about Chinese spirits Red wine is expensive Well-educated people with good income drink red wine You can mix red wine with other drinks (e. g. sprite) so you drink less alcohol Beer tastes better than red wine Red wine cannot replace Chinese spirits Red wine is good for those who are not very good at drinking Red wine drinkers are young and modern Wine suits women more than men as it contains less alcohol People who often drink red wine like following western lifestyles Xiaozia prefer red wine Wine suits get-togethers with less familiar or new friends as nobody would get drunk. (getting drunk in public is embarrassing) Red wine tastes good You can mix red wine with other drinks (e. g. sprite) so you can try more varieties than Chinese spirits Red wine is a better gift choice than spirits People above 40, white collared, will like red wine Chinese spirits have a bigger market than red wine as people drinking red wine are a small group Wine is for appreciation not for competition like Chinese spirits (Chinese like to compete on the quantity they drink when they consume Chinese spirits) Count 11 8 8 8 7 5 4 3 3 3 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1. Chinese wine consumption 103 Notes: aXiaozi directly translates as small capitalist. Compared to other middle-class Chinese, this subset is extremely concerned with image and tends to consume expensive and branded goods to show that they live better than others do. They often favour western lifestyles Interviewee thoughts associated with red wine Table II. consumers perceptual maps of alcoholic drinks, red wines main competitor was Chinese spirits. Eleven out of 15 interviewees said that drinking Chinese spirits or red wine depended on the occasion or chang he. Among these 11 interviewees, eight said that red wine was particularly good for celebrating Chinese New Year and other holidays as red symbolises prosperity, luck, and good fortune. Interviewees C, E, and F, all businessmen,  ± said that red wine was good for banquets with important business connections or guan xi hu. This common thread among the businessmen suggested that red wine is starting to appear in business banquets, traditionally dominated by Chinese or foreign spirits. Besides occasion, another important thought related to red wine was attributes. Red wines health aspect was the most important, and most recalled, attribute. Some of this perception may stem from Chinese Prime Minister Zhus 1997 speech promoting IJWBR 19,2 104 red wine as healthy (Anderson, 2001). Eight of 15 interviewees believed that red wine was healthier than Chinese spirits as it contained less alcohol. Of these eight interviewees, four were high income earners (C, E, F, and N) and four were middle income (A, H, I, and M). Living healthy is an emerging trend for Chinas middleand upper-income classes, so red wines health aspect probably attracts wealthier Chinese. Comments from subject C, a businessperson, covered the major perceived benefits that Chinese consumers had regarding drinking red wine (see below). Due to his age, he appeared to emphasise the health aspect of the red wine. If I had a choice, I would drink red wines in most social get-togethers. Red wines contain less alcohol so it is not as lie (strong) as Chinese spirits or foreign spirits; therefore, it is better for health. You know, at my age, when you reach 40, you must take care of your health. You cant drink alcohol as if you drank when you were 18 or 20 year old. Also, there are different ways of drinking red wine such as straight red wine or red wine mixed with something else like a cocktail (so it is less alcoholic). Even elderly people and young kids can drink red wines whilst these people wont be up for Chinese or foreign spirits. In addition, red wine indicates good luck so it is good for important occasions such as birthday parties and festivals. Other attributes mentioned were red wine indicates good social image; people who drink it have good taste (B, C, E, G, I, M, and O). Red wine is expensive (B, G, and O), beer tastes better than red wine (B and M), and red wine is not strong enough (B). Compared with the health and social image, the other attributes seemed less important. Consumers evaluate products on intrinsic and extrinsic cues (Ophuis and van Trijp, 1995). Wines intrinsic cues include physical attributes such as colour, aroma, and taste, which cannot be changed without changing the physical product itself; extrinsic cues associate with the product but are not physically part of the product such as brand, price, and distribution (Dimara and Skuras, 2001, p. 692). Healthy seems an extrinsic attribute as it stems from the perceptions that red wine contains less alcohol than Chinese spirits, and red wine is a fruit- rather than rice-based drink. Good social image is also an extrinsic cue. The above analyses indicate that extrinsic rather than intrinsic attributes dominate Chinese consumers perceptions. This also suggests that Chinese consumers know little about wine and aligns with studies of intrinsic vs extrinsic cues. Expert consumers, knowledgeable about the product, rely more on intrinsic product cues, while novice consumers with little product knowledge tend to rely more on extrinsic cues (Maheswaran, 1994; Laroche, 2005). A final category of thoughts related to who consumes wine. The most frequently mentioned statement was red wine drinkers are conscious about their face or image (B, H, I, J, and M). Being conscious of mianzi, directly translated as face (Graham and Lam, 2003), is a key Chinese characteristic; people are conscious of what other people think about them (Zhang, 1996). Four respondents (D, G, J, and I) noted that drinking wine was more elegant and gracious than drinking Chinese spirits. Two subjects (M and O) commented that people who often drink red wine like to follow the western ways of life as red wine indicates something non-Chinese or, in particular, western. These results confirm the importance of extrinsic cues. Drinking red wine suggests good social image, elegance, and grace, all of which indicate good mianzi. However, the perception that red wine drinkers are conscious about their mianzi could be negative. For example, Subject M, a well-educated female in her early 30s, told the researcher that: Red wine is particularly attractive to those Xiaozi (Small Bourgeois) people but I am not a Xiaozi type of person. (Why? ) Well, I will consider myself a middle-class person with good income and education but a Xiaozi person is different. Xiaozi is not decided by education or income, but rather by the xingtai (values). Some people may not have high income but they are very concerned with their public image. They want to be seen as unique and different. When they speak, they will always use a few English words in a Chinese sentence. They would also speak Chinese with a somewhat different qiangdiao (intonation). They like to follow the trends and fashions from western countries. For example, they would drink Cappuccino rather than tea. A Xiaozi type of person may earn only 3000 yuan a month but he or she could spend 4000 yuan on a Luis Vuitton bag. Frankly speaking, Cantonese (Chinese living in and around Guangdong province) people seem to be less xiaozi because Cantonese are very shiji (practical or down to earth) so they care more about the actual functions or benefits of a product rather than the image. For example, a rich Cantonese man may drive a BMW (an expensive car in China) but he will stop in a small takeaway at a street corner to buy a bowl of beef noodles if he thinks the noodles are good. This will never happen with a Xiaozi type of person. Chinese wine consumption 105 The drinking scent When asked how often they drank wine, the responses were one to three times a month (A, C, D, E, and F), one to three times a year ( J, K, L, M, N, and O), and once or twice in their life (B, G, and I). Four out of the five heavy drinkers, albeit light drinkers compared to Australians, were businessmen over 40, and had the highest income. They had more opportunities to drink red wine as they attended more business and social functions.