On Feb 11, 2010, at 3:49 PM, PL wrote:
John Spiers,
I want to add to the student in class whom asked about exporting wine to China. I understand that there is a "Market for it" And i know you mentioned in the discussion or advised that they can be shipped through 'Expeditors -Freight forwarding company.
I know already a friend whom knows Chinese buyers whom "Want to ' Import and Buy USA wine and distribute to China. So, coud I say Ive already found Customers now, and its only now the issue to find the Wine that will be needed to make the order go through?
Just wondering what directionm you canm point me in on here?
Thank you
Patrick
Patrick,
The technical definition of a customer is someone "ready, willing and able to buy." The way you prove this, is bona fide orders in hand. So in your scenario above, you could NOT say you already have customers. I've attached a .pdf of wine exports to asia. It shows indeed wine sales to Hong Kong and China are growing rapidly. The main reason for this is Hong Kong eliminated the restrictions and duties placed on wine and spirits in 2007 and 2008, which would explain the increase in hong kong, but not explain the increase in China and Singapore. i have my suspicions why those places are growing, but let's stick with hong kong to understand some points. As you can see hong kong has enjoyed fifty, 400 and 650 percent increases over 2005 in the last few years. Study that spreadsheet and ask questions if you like, such a spreadsheet you'll work up in the next week for your product area.
Wine sales are growing rapidly for anyone who has been selling to China for the last 50-250 years. Sales are not growing rapidly for people who decided to get into the trade in the last few years. Look at the average price paid by Hong Kong importers for wine from usa. Try finding wine in USA you can sell for $3 a bottle and make a profit. Gallo can do it, and Gallo is a huge importer with sales offices in Hong Kong. And that average includes such USA wines as Far Niente, which sell for $50 a bottle. Yes, you can make money selling upscale wine in Hong Kong, but why woudl Far Niente work with you? Why would a Hong Kong importer buy Far Niente from you? If you can answer those questions, maybe you have a chance.
Take Hong Kong alone. Of the 7 million people in Hong Kong, there are 2000 people who drink good wine regularly, integrated into their life style. There are 20,000 who drink wine often. There are some 200,000 who have a glass of wine once a year, at a wedding reception or some event. No one else drinks the stuff. Traditionally what the chinese call wine, what Li Bo would write about, rice wine, is a cross between fermenting as in wine and distillation as in whiskey, what the japanese call sake. Rice wine is not grape wine.
Since you know someone who wants wine in China and "there is a market," you asked if this means you have customers, and I said no. What you describe are the conditions where very many people come to grief, and will trying to get into the wine business in Hong Kong and China. First rate USA wines are being sold out the back door of wineries for cheap get rid of oversupply. Off to china it goes, to start up businesses who do not know how to handle wine, where it is not transported correctly, so USA wines end up being ruined before they are served. Presently USA wines have a reputation for tasting bad. Wannabee wine trader will waste a lot of time and effort, if they are not actively ripped off.
The brits control the spirits trade worldwide, and they are not about to let anyone else in, if they can help it. They cannot help that the Chinese are making their own wines, working with Rothschilds and Jepsons and other first rate winemakers. China will have wines as good as anywhere else on earth in 15-20 years. They will not rely on the brits to distribute it.
It is possible to start up a wine business trading with China that could be very good. Of course, you would have to have a passion for wine, or forget about it. The very best strategy for exporting wine to China would be to import Chinese wines to USA. If you had a way to test Chinese wines, that is a customer base of USA wine buyers, then you could provide the Chinese USA feedback on Chinese wines. These chinese winemakers would of course have distribution within China. What they can sell within, even a little USA wine on the side for China, would be very good business for a USA wine exporter.
At the same time, you could enter USA wines in the Hong Kong wine competition. If a USA wine were to wine a gold medal at that competition, then it could write its own ticket. Of many entries in 2009, only one USA wine won a gold medal.
It all starts with passion, and then providing a value no one else will or can provide, and then experiencing joy working on solving the problem. Selling wine to China can be a very good business, but it has to be "you."
Click for larger image...
John
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