VENI, VIDI, VINO!

Wine Consumption Habits in Taiwan and Marketing

OpportunitiesPresented by:

Fon

James

Joe

Sarah

Terry

National ChengchiUniversity

Marketing ManagementProfessor Trappey

Agenda

• Project Background & Taiwan Wine Market Overview

• Hypothesis

• Market Research Methodology

• Research Analysis

• Conclusions & Recommendations

Case Study:

A “New World” vintner has read that wine sales are increasing faster in Asia than anywhere in the world. He produces a variety of dry, red wines and would like to know what are the opportunities in Taiwan? He decides a little research is necessary…

–What are the tastes of the Taiwanese wine consumer?

–How much will they pay for a bottle of wine?

–Which distribution methods would reach his best target market?

Overview of the Taiwan Wine Market

• Based on a VINEXPO study, the Taiwanese wine market was US$88M in 2004, compared to 2002 which was US$60M

• In terms of volume, in 2004 69 million liters were sold compared to 2002 when 48 million liters were sold.

• Vinexpo expects that wine consumption in Taiwan will reach 126 million liters by 2010.

Top 10 Wine Importer Country in Taiwan

Thous. Liter %

67,780.42 51.55

24,250.23 18.44

10,259.38 7.80

7,327.80 5.57

4,317.27 3.28

3,654.76 2.78

3,641.14 2.77

3,119.23 2.37

1,759.24 1.34

1,497.80 1.14

France

USA

Australia

Chile

Span

Japan

Belgium

Country

Italy

Argentina

Germany

Source:Directorate of general customs 2004

France dominates over 50% market share of import wine

Wine Characteristics: The Basics

• Geographic Regions• Bordeaux, Champagne, etc.

• Grape Varietals• Red: Merlot, Zinfandel, etc.• White: Riesling, Chardonnay, etc.

• Sweetness– Soft

• Sweet• Concord, Beaujolais, etc.

– Dry• Less Sweet• Cabernet, Merlot, etc.

• Wine Making Method– Still– Sparkling

Regulatory Market in Taiwan

•Tax Amount–NT$ 185 per liter

•Required Packaging–Brand Name–Product Type–Alcohol Content–Origin of Product–Producer Name and Address–Volume–For spirits under 7%, expiration or bottling date–Health Warnings–Other labeling required by relevant authorities

•Advertising and Promotions shall not involve:–Violations of public order and good morals–Encouragement or advocacy of alcohol consumption–Harming adolescents or advocating pregnant women to drink–Exaggerations, deceptions, distortions, misrepresentations

Source: TaiwanTobacco & Alcohol Administration

Methodology

Survey Instrument:Questionnaire

• Distribution Channels

• Demographic Information

• Consumer Behavior– Decision making factors in product

selection– Consumer interest– Product awareness

Wine Market Trends

• The wine category is different than other Fast Moving Consumer Goods– Lack of large or dominant brand names– Top 1000 brands control only 28% of the

market

• Despite modest mergers in distribution networks, this channel also has many smaller companies– On trade (sold at retail for on premise consumption)

creates more value (about 35% of all sales)– Off trade (consumed away from point of purchase) sells

more volume (about 65% of all sales)

• Trend of one-stop convenience shopping– Supermarkets, hypermarkets, convenience

stores have the greatest share of the low-end bottle sales

– Young people prefer corner stores or convenience stores

H1(a): On trade sales volume is less than off trade sales volume.

H1(b): On trade sales generate higher revenues than off trade sales.

H2(b): Convenience stores, hypermarkets, and grocery store sales account for most sales under $500 NTD.

H6(b): Young people go to convenient stores to buy wine.

Demographic Information

• Young people are easier to approach for contributing to a wine survey– Does this skew our results? – Does this skew everyone else’s results?

• Young adults spend more on a bottle– They use price as an indication of quality– They prefer corner stores/convenient stores

• Labels and gender– Males and females respond strongly to different

types of label designs (sex appeal vs. sensory)– Men prefer to use a friends suggestion rather than

other factors to choose a brand of wine

• Lifecycle vs. lifestyle– Age and gender are not as important as marital

status and family size when segmenting consumers in the wine category

H5(a): Purchase frequency is not a factor of age.

H5(b): Marital status categories are more important than age, in regards to purchase frequency

H6(a): It is easier to approach younger people for contributing to a wine survey than older people.

Consumer Behavior

• What features of the product do consumers consider when choosing wine?– Label and packaging– Price

• What kind of wine products are most popular in Taiwan?– #1 French, #2 American, #3 Australian– Sweet and soft wines– Red and rosé wines

H2(a): Taiwanese consumers prefer red wine over white wine.

H4: Taiwanese consumers prefer sweet wine.

H6(c): People are interested in more Wine Education.

H6(d): Bottle Appearance/Packaging is an important factor in choosing wine.

H6(e): Young adults (18-24 yr old) tend to spend more money on wine than older adults.

H7: When making wine purchases, consumers are most influenced by price.

H8: When making a purchase, consumers are most influenced by the label and packaging.

H9: Men place greater importance on friends' recommendations.

Product Awareness

• Taiwanese consumers are exposed to a variety of wine marketing techniques– Tasting events (foreign trade offices, local

vendors)– Price promotions– Premiums and gifts– Advertising

• Taiwanese consumers are interested in learning more about wine

H3(a): Taiwanese consumers are interested in learning more about wine.

H6(c): People are interested in more wine education.

Data Analysis

Where Wine Purchase

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Reply % 28.5% 26.9% 23.8% 10.0% 10.0% 0.8%

Specialty WineShop

Hypermarket GroceryConvenient

MartBar /

RestaurantNo Reply

Volume of “On Trade Sales” are less than “Off Trade Sales”

1Budget Wine Purchase vs. Where Wine Purchase

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

No Reply 0.0% 0.0% 0.0% 0.0% 0.7%

Bar/Restaurant 0.0% 4.0% 4.0% 0.0% 2.0%

Convenient 1.3% 5.4% 2.0% 0.0% 2.0%

Grocery 4.0% 11.4% 6.0% 0.7% 3.4%

Hypermarket 8.7% 7.4% 3.4% 0.7% 5.4%

Specialty 2.7% 8.7% 6.0% 2.7% 7.4%

-500 500 - 1,000 1,000 - 1,500 1,500 Not Sure

1. “On Trade Sales” generate higher revenues than “Off Trade Sales”

2. Most sales under NT$500 are via convenient stores, hypermarkets & grocery stores

2

Wine purchase frequency is not a factor of sex

Wine Purchase Frequency vs Sex

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Rarely 55.56% 58.70%

1-3 Bottle/Month 29.63% 23.91%

1 Bottle/Week 9.26% 8.70%

2+ Bottle/Week 3.70% 8.70%

No Reply 1.85% 0.00%

Female Male

Wine purchase frequency is not a factor of age

Wine Purchase Frequency vs. Age

0

5

10

15

20

25

30

35

40

21-34 36 12 4 3 0

35-49 18 12 4 2 1

50-64 2 2 1 1 0

65+ 1 0 0 0 0

No Reply 0 1 0 0 0

Rarely1-3

Bottle/Month1 Bottle/Week 2+ Bottle/Week No Reply

Wine purchase frequency is a factor of marital status

Wine Purchase Frequency vs. Marital Status

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Rarely 35.71% 56.67% 61.82% 100.00%

1-3 Bottle/Month 35.71% 26.67% 25.45% 0.00%

1 Bottle/Week 21.43% 10.00% 5.45% 0.00%

2+ Bottle/Week 0.00% 6.67% 7.27% 0.00%

No Reply 7.14% 0.00% 0.00% 0.00%

TOTAL 100.00% 100.00% 100.00% 100.00%

Married withoutChildren

Married withChildren

Single No Reply

Where Purchase Wine vs. Age

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

21-34 11.54% 13.85% 13.08% 6.92% 7.69% 0.00%

35-49 13.08% 10.00% 10.77% 3.08% 2.31% 0.00%

50-64 3.85% 2.31% 0.00% 0.00% 0.00% 0.00%

65+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.77%

No Reply 0.00% 0.77% 0.00% 0.00% 0.00% 0.00%

Specialty Hypermarket Grocery Bar/Restaurant Convenient No Reply

Young Adults buy wine at convenient stores

AGE 0

20

40

60

Respondent 55 37 6 1 1

21-34 35-49 50-64 65+ No Reply

Young adult are easier to approach for a survey than older people

Taiwanese consumers prefer sweet wine

Preference of Wine

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Reply % 30.4% 22.4% 21.6% 13.6% 12.0%

Sweet Wine Medium Wine Dry Wine Sparkling Wine Not sure

Wine Purchase Frequency vs. Interest in Wine Education

0

5

10

15

20

25

30

35

No 14 8 1 1 0

Not Sure 14 3 1 0 0

Yes 29 16 7 5 1

Rarely1-3

Bottle/Month1 Bottle/Week 2+ Bottle/Week No Reply

Taiwanese consumers are interested in learning more about wine

Conclusions

Flavor Profile: Mass market of soft wine and selective market of dry wine

• Although the Taiwanese Market tends to prefer soft wines, as consumer knowledge matures, appreciation of dry wine increases. A focus on dry wines could be sold at specialty shops where more wine education can be delivered and a fuller selection of wines sold in hypermarkets and grocery stores

Target Market:Young AdultsMen AND WomenSingle AND Married without children

• Marketing strategies should be aimed at younger adults. Promotions, premiums and labeling should resonate with the youth market. Sophistication and participation in the global wine culture should be themes of marketing campaigns.

Price:NT$500-1000

Although NT$500 -1000 is the strongest selling price range, the price ranges immediately above (NT$1000 - 1500) and below (Under NT$500) were the second and third most popular responses. A producer could find a variety of wines to fit within these price categories.

Distribution:High End; Specialty Wine ShopsLow End; HyperMarket and Grocery

• A dual distribution strategy with high end, premium wines being sold in speciality shops and lower end wines being sold in hypermarkets and grocery stores. These three channels comprise 80% of the wine market sales.

Thank you for your attention!

Sarah Chen95933007

Sieu Fon Choi 95933055

Terry Lin 95933019

James Palmer 95933038

Joe Zagorski 95933045