Steve Bird sees massive potential in China

Steve Bird has been exploring export opportunities in the Chinese market.

Tauranga-headquartered winemaker Steve Bird sees great prospects for New Zealand wines in China.

Mr Bird keeps his head office in Tauranga for lifestyle and family reasons, though his Bird Wines range is produced in Marlborough.

"If I had to live where our company needed us most now it would be San Francisco," he said. "But this time next year, it will be Shanghai."

China was a very exciting market, and still in its infancy, said Mr Bird, who has been exploring opportunities in the market there.

According to New Zealand Trade and Enterprise, while the wine market in China is relatively small, it is growing at a rapid rate and is expected to reach a value of close to US$19 billion ($23 billion) within three years. Wine consumption is mainly driven by the young and affluent class in China's urban centres. China has recently seen rapid expansion of its domestic winemaking industry and there are now over 500 wineries.

But though domestic brands dominate, international brands are sought after by local consumers. The main channel for sales is through top end hotels, restaurants, bars and nightclubs, accounting for about 35 per cent of total market volume, says NZTE.

With imports currently accounting for only 20 per cent of the domestic demand, NZTE sees huge export opportunities for New Zealand winemakers. According to Mr Bird, while the consumption per head is currently very low, within five years China could become the third biggest consuming company in the world, simply because of the population base.

Research into the behaviour of Western "millenials" - consumers who are coming of buying age now - suggests that when they enter the wine market they don't come in and build up to the national average, they come straight in at the national average and at a slightly higher price point, he said.

"They demand more information - they want to know more and they want to reach out to their wine guy," he said. "Well the Chinese millenials coming through are not really a lot different. They have this thing in their culture about loss of face. They want to be actively engaging people in this conversation about wine, but they don't want to get it wrong, so they're going out and doing wine courses, they're studying wine."

Mr Bird said that meant companies marketing wine in China had to be very careful what they told the market because the buyers were becoming knowledgeable.

"It's going to be a challenge for us," he said. Up until recently affluent Chinese consumers had been drinking the best labels they could get their hands on - Bordeaux, Burgundy, Champagne, French cognacs, he said.

"They want all the expensive stuff with the great labels, because that gives them prestige. But we're going to see that change and when it does we will need to understand the flavour profile, and how they use the wine."

Mr Bird said that one of the things he had learned from visiting China, was that companies needed to be on the ground. "You've got to get in, understand the culture, and understand what these people like. And you're going to have to have someone in the marketplace all of the time."