On December 12, 2002, Suntime-Impression, a joint venture between the Chinese wine industry's two new big players--Suntime and Impression, was founded. When asked what the mission of Suntime-Impression would be, or what kind of role it would play in promoting wine consumption, Impression's CEO Tan Wenhua, an entrepreneur famous for being good at stirring up and sensationalizing things, gave the wine industry an answer that could not have been more surprising: Everyone should drink wine as if they are drinking milk.

Their following actions are as astonishing and dumbfounding as their speech. To wake up the awareness of consumers' wine consumption, in 2003 Suntime and Impression invested 125.4m Yuan into their advertisements on CCTV--the largest TV station in China, accounting for 52 percent of CCTV's prime time. This March, Suntime declared that they are launching Tetra Pack-bag wine. Not long ago, they launched wines priced at only 10 Yuan (US$1.20) through their large scale distribution network set up through allying with Haier, China's most renowned household appliance producer. Since its establishment, Impression has created a series of Impressions: Yunnan Impression, Tibet Impression, Changli Impression, Northeast Impression and Changbai Mountain Impression. Maybe someday they could work out a Yantai Impression or California Impression.

Suntime is "aiming to become the biggest wine producer and to thoroughly change Chinese consumption patterns," general manager Chen Yong said.

But the question remains. Can they really change Chinese consumption patterns? Or, more accurately, who can change Chinese consumption patterns?

China is a country with a civilization history of more than 5,000 years. In its drinking culture, Baijiu, or white spirits, has been holding very strong roots. Before the 1980s, few Chinese knew what grape wine was.

The reform and opening policy in the early 1980s did bring some changes in Chinese alcoholic drinks consumption. A new word was created, Yangjiu (means exotic wine or imported wine), and some rich Chinese people began to drink Yangjiu to show their success. However, the concept Yangjiu was born deformed because when Chinese people speak of Yangjiu, most of them always first think of Napoleon, Remy Martin, Hennessy, XO, Whisky and Brandy. Ninety-five percent of Chinese people know the best wines come from France, but 95 percent of Chinese people don't know where Bordeaux is, don't know there is a place called Napa in California and don't know what AOC or DOCG is.

In the mid-1980s, some domestic producers and joint ventures began to produce red and white wines on a large scale. They developed into today's three most famous brands: Changyu, Dynasty and Great Wall.

Currently, the three brands control 80 percent of the wine market shares. China's per capita wine consumption has increased from almost zero to nearly 0.5L, though well below the world average. However, all Chinese wineries, including the three brands, failed to educate consumers on wine knowledge because their only concern was marketing or brand building. Wine is consumed mainly because of special occasions or because of health aspects. Among total alcoholic consumption, wine represents only 1 percent.

So far today, most Chinese people know little about food matching, serving and storage of wine. Many Chinese people still like quaffing rather than sipping wine. In banquet halls, you can often hear the noisy sound of Ganbei (which means bottoms up) and some people keep persuading others to drink until some guys are drunk under the table. They still want to look for the excitement of strong alcoholic spirits in wine. These so-called old forces mistakenly transferred to consumers such a message: wine is a noble product enjoyed by noble people. In this sense, these well-known brands failed to change Chinese people's consumption customs.

The so called new forces, or the new world of China's wine industry, represented by Suntime, Impressiom, Mogao and Yunnan Red, mainly based in the western part of China, also put too much of their attention on market expansion, production improvement, price strategy and brand enhancement. They do see the importance of price, but they failed to see the most in-depth features in wine itself and the inner world of consumers. The reason for using Tetra-Pack is cost, because "packaging accounts for 20 percent the price of a bottle of wine," said Jia Bowei, director of Suntime-Impression. Tan Wenhua predicts 15 percent of Chinese wine could be packed in Tetra-Pack within next several years.

However, the industrialized production of wine could damage the image of wine in consumers' minds and finally hurt the real wine lovers' confidence in wine.

Some analysts affirm that even if these new forces could change the existent consumption customs, it would be a long process because of consumers' lack of understanding of their quality and tastes.

In fact, when these new wineries are focusing on volume and price, some old wineries have forged a new concept--Chateau Wine. The most prominent Chateau may be Yantai-based Chateau Changyu-Castel, a Sino-French Joint venture built up several years ago. These Chateaus are aimed at improving the image of wine and leading wine consumption to a healthier direction. Contrary to large-scale industrialized production, concept Chateau represents elaborate winegrowing and careful winemaking.

Let us look at those Yangjiu, or foreign wines again. Every one knows China is huge wine market with great potential. But affected by domestic wine, foreign wine is now losing market share. Presently, foreign wine and spirits hold no more than 5 percent of the market share, mainly in large cities such as Shanghai, Guangzhou, Beijing and Fuzhou. Consumption of foreign wine occurs only in nightclubs, bars and high-class restaurants and hotels. The Chinese seem to prefer local wines rather than imported brands. Imported wine bought in supermarkets is primarily for presenting as a gift to a friend. Expensive prices caused by high tariffs are just one of the reasons for the poor market performance of foreign wines. Lack of understanding of Chinese culture, unsuitable tastes, failing to establish close marketing channels and publicize wine awareness such as region, classification and grape varieties used are all more important reasons for imported wines failing in China.

The duty rate for sparking wines and others, filled in repositories with less than 2 kg will be reduced to 14 percent by 2004, down from the current 24 percent. For other wines, the duty rate will lowered to 20-35 percent by 2005.

But by then, whether or not imported wine can compete effectively with Chinese wine, will still be question mark.

Fortunately, more and more wine professionals and some foreign brands have realized these problems. More and more mass media are involving themselves in propagating wine consumption as a part of a healthy lifestyle. As an important starting step to improve the quality of wine as a whole, China has stopped half-juice wine production since July. It is no longer allowed to call a wine anything other than a full-juice wine product. Some renowned wineries are beginning wine knowledge education campaigns to attract new consumers. In China, the number of wineries that own state-of-the-art winemaking equipment is not small. Most big wineries are beginning to emphasize quality grape growing.

With the competition getting more and more intense, some imported brands are beginning to adjust their market strategy. Sopexa (French food association) Shanghai office, the most important promotional body for French wines in China, has expanded its wine marketing channel from high-class restaurants and the entertainment industry to the retail area after a survey conducted in 14 major cities. Italy's many wine producing regions have organized a series of tastings in Shanghai and Beijing to introduce Italian wine and food to Chinese people. BRL Hardy, Australia's wine giant that has been incorporated into New York-based Constellation Brands, is selling its bottled wines by making full use of the distribution network of Dragon Seal, a Beijing-based big winery. Chilean and some other South American wineries directed their attention to exporting bulk wine to Chinese wineries. Some New Zealand wineries are exploring the possibility of establishing joint ventures with Chinese vintners.

Can these imported wines change Chinese consumption patterns? Of course not, because "no one could become another Coca Cola in this industry."

Then who can change Chinese consumption patterns? The answer is no one. At least, not without implementing a long-term, step-by-step procedure. Every interested foreign winery needs to start from the most basic plan. Any idea for quickly making money is doomed to fail. wbm