There are 1.3 billion potential wine drinkers in China, and Scott Henry, owner of Henry Estate, a winery in Umpqua, Oreg., was convinced they'd love his pinot noir. Henry understood that Western-style wine is a relatively new phenomenon in China, but he also believed that his wine's taste and texture were a perfect match for Chinese cuisine.
Henry Estate is no stranger to exporting. For the past 10 years it has shipped cases to Canada, the U.K., and Japan. How much harder could it be to add China to the list? So last fall, Doyle Hinman, the winery's marketing director, had some marketing materials translated into Mandarin, slapped some Chinese-language labels on the bottles, and found a distributor, Portland, Oreg.-based American Pacific, with contacts in the country. Soon, 700 cases of pinot noir were en route to China. "We were prepared for the wine to explode," says Henry. "We were set to handle a demand of 500 cases a month."
But four months later, most of that wine was still on the shelves in Chinese stores. Hinman and American Pacific's Terry Protto hopped on a plane to investigate and were stunned by what they found. No one in China, not the local distributors, the retailers, or consumers, seemed to know the first thing about red wine. For one thing, the wine, which retails for $62 a bottle, was being sold in the equivalent of convenience stores. Bottles were being delivered on the backs of motorcycles and were often left sitting in the sun for hours. "I thought some things about wine were just known," Hinman says. "Not there."
With scores of U.S. and European wineries jockeying for position in the Chinese market, Hinman thought that just getting his product to market would be the most critical hurdle. But globalizing a product, especially something as culturally intricate as wine, is a lot more complicated than that. "When you introduce a new product overseas, no matter what it is, you have to go through a process we call localizing the brand," says Chanin Balance, CEO and founder of ViaLanguage, a translation firm based in Portland, Oreg. "You have to introduce it in a way that is congruent with the culture."
Having botched their first impression, Henry Estate and American Pacific--which formed a partnership to tap the Chinese market--were determined that their second be more successful. "Our mantra," says Protto, "was 'Assume nothing." The first move was to get a better understanding of who their customers were and how to get the wine in their hands. Protto tapped one of his Chinese associates, who began canvassing government officials, young banking and finance executives, owners of chic restaurants and bars, Western expatriates--anyone who seemed likely to be a wine drinker. He discovered that Chinese buyers are as interested in the status that wine confers as they are in the way it tastes. He also learned that the government-controlled Chinese Central Television network had launched a series of ads touting the health benefits of drinking red wine--which could provide a nice marketing bounce.
The Henry Estate team didn't waste a minute. They abandoned the small retail stores and used their Chinese connections to get the wine on menus at upscale hotels and restaurants in Beijing and Shanghai. Protto, who is fluent in Mandarin, gave tutorials to waiters, showing them how to pair pinot noir with food and laying out an incentive plan to encourage servers to recommend Henry Estate. Turning their attention to merchandising, they began packaging individual bottles and pairs of bottles in a rustic wooden box, with "Oregon Pinot Noir" stenciled on the side, along with a pair of wineglasses. Hanging around the bottle's neck was an 18-minute DVD demonstrating how the wine is produced and how it should be consumed. "Chinese customers would often whip out their mini-DVD players and watch the video right there at the table," Protto says.
Henry Estate and American Pacific have spent about $250,000 on such efforts--plus about $5,000 in financial assistance under a Department of Agriculture program designed to stem the trade deficit by spurring exports. The campaign is beginning to pay off. Two high-end Chinese supermarket chains, with more than 2,000 stores each, are sending representatives to visit Henry Estate this winter. The winery is also negotiating with Disneyland Hong Kong, which is considering adding Henry Estate's vintages to several restaurants' wine lists. Meanwhile, the winery's second shipment--of about 600 cases--is scheduled for the end of the year. "It's an untapped market over there," Henry says, "and we've been able to build a solid foundation."
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For more on government export-assistance programs, see ffas.usda.gov/mos/programs/map.asp.