[00:00:05] Speaker A: Welcome to Drinks Insider, the podcast that's interested in everything you can drink, if it's legal, if you can sell it, and more importantly, if you can make money from it, then we're going to talk about it. So come on this journey into the commercial world of everything drinkable. I'm your host, Felicity Carter, and you're listening to Drinks Insider.
30 years ago, Ian Ford arrived in China. And when he was there, he saw something that most wine exporters missed. He saw a dining culture of extraordinary complexity, a population that had no religious objections to alcohol, and a loose regulatory environment.
So he began importing wine in 1999, and he's not only been navigating the China wine market ever since, he is an expert on Southeast Asia in general.
Today he runs Nimbility, an export management and market development operation with teams across the region, working with producers from route to market strategy through to brand building, and most importantly for this podcast, trade intelligence. In this conversation, we cover a lot of ground. For example, why the post tariff Australian wine recovery in China stalled, What blind tasting clubs run by tattooed20somethings tell us about where Chinese wine culture is heading and why New Zealand Sauvignon Blanc and German are the winners of the current moment.
Also, what a May 2025 government decree banning alcohol at official functions has done to the wine market. And why, despite everything going on in China, from the economic headwinds, the collapsed real estate sector, to high levels of youth unemployment, Ian is still amazingly optimistic. Whatever happens, don't forget to hit subscribe. And like every time you do it, it helps the podcast. And also, don't forget to subscribe to the Drinks Insider newsletter at drinksinsider. Do.
Ian, you arrived in China in 1995 when imported wine was still largely a hotel and expat category. What did you see that early exporters missed?
Why were you there?
[00:02:18] Speaker B: So I was there because I had studied Chinese in college. And you're right, it was 1995 that I took up a job with Seagram. So we were primarily actually at that point marketing and selling cognac and to a lesser extent, Scotch.
But I started a wine import business in 99, and having been there for about five years, I saw all kinds of signs that there would be a very dynamic market in China for imported wine that was not really being addressed. I don't want to be disrespectful of my competitors at that point because.
[00:02:56] Speaker A: Say what you mean.
[00:02:58] Speaker B: No. There were a couple of guys that had started up before me.
For some reason, it was all North Americans don St. Pierre and there were a couple of others, the founder of Montrose.
But yeah, I think the incredible dynamic dining environment in China, which to this day is extraordinary and an incredibly fertile ground for imported wine in China that still hasn't really been fully expanded upon.
And the complexity of Chinese cuisine, the importance of the dining occasion, the fact that you have a very friendly environment really for beverage alcohol generally in China, you don't have religious objections, you have very. Actually quite loose regulatory environment now.
So, yeah, and I think I also loved wine and I love the idea of getting into a wine business and importing it and selling it and talking about. About it. And so that was what I did.
[00:04:00] Speaker A: I'm old enough that I can remember the huge excitement about the market, particularly after Hong Kong dropped duties in 2008. I mean, I remember going on press trips, especially to France, and the bus would come and take the Chinese journalists first and we'd be sort of left.
We were very clearly not important in those days. But how much of the boom was real customer adoption and how much of it was just this great flashy new thing that came and went.
[00:04:26] Speaker B: So I think a lot of it and what we're missing a lot of today is government and corporate related entertaining and banqueting and the extravagant consumption that went hand in hand with this incredible burst of economic growth that was taking place in China.
And that affected baijiu, it affected other whiskey and cognac. It was not just wine that was, that was experiencing that.
And that was where you saw a lot of trophy consumption, a lot of conspicuous consumption of Lafitte and Penfolds and anything that had recognition within China as being a prestige and leading wine.
And a lot of that's fallen away. I mean, I hesitate to say all of it, but a lot of that has fallen away.
And so what you have now is a lot of consumption. That what we see is a lot of more preference driven consumption. It's why we see the rise of Marlboro Sauvignon Blanc and German Riesling in particular in the last couple of years. Aromatic whites in general really on the rise in China. This is the result. I mean, if you look at import statistics into China, New Zealand and Germany are growing significantly and New Zealand has never been as big as it is right now in China.
[00:05:47] Speaker A: All right, let's just go back a step because I should ask you, do you want to explain nimbility? You don't import or distribute wine. What do you actually do? Explain your model.
[00:05:57] Speaker B: So we're a team of people spread across the region. And we represent producers of wine and spirits and some non alcohol premium beverage brands for all of Asia Pacific. So we're effectively a full stop, one stop shop for export management, marketing route to market development, advocacy, trade shows.
We do everything on behalf of a group of producers who have hired us to do so.
So that, that's in a nutshell, what we do more than anything else.
We work, for example, with probably 15 different importers in China at this point, maybe, maybe even more than that.
So we work very directly with them. We're here on the ground in Shanghai and in Hong Kong for southern China.
We're very engaged with these importers and we work with them on behalf of the producers to then try to build the market here for those wines.
[00:06:57] Speaker A: All right, so I want to go back to. I cut you off with New Zealand Sauvignon Blanc and Riesling. Now they've been. Both of those countries have been doing joint promotions and so on. How much of the takeoff of those styles has to do with the promotions and how much of it is. They came and promoted because they could see it was, it was working organically?
[00:07:16] Speaker B: Well, I think foundations were laid for both of those categories. We started importing New Zealand Sauvignon Blanc, Villa Maria in particular, in 1999, and Ernie Lucent's wines, I think in 2005. Four in my previous life at Summergate, where I was actually importing, and we were putting those wines by glass in hotels and restaurants and wine bars all over the country. And so you're already talking about a good 20 years of foundation building for those categories of wine here.
But they are definitely meeting the moment. They're meeting the moment for that fresh, aromatic, bright, crisp, very refreshing style of wine that seems people are looking for, from a price standpoint, also meeting the moment here in China where there's a bigger hunt on for value as opposed to prestige and status.
So I think they're having.
It's a bit of a combination. The moment has met them and they're meeting the moment, I think in both directions.
[00:08:16] Speaker A: That's so interesting. I mean, do you think there was always that preference there and people were just too busily focused on the prestige market, or do you think this is a recent preference that's emerged?
[00:08:29] Speaker B: I have to say, I think, you know, when we did tastings throughout the years, what people preferred in a tasting was completely different from what people were buying. And I think there was. There was that conspicuous consumption element. There was when you're entertaining friends or business clients or even Government.
You know, there was a, there was a very conspicuous nature to it as opposed to I've gone around and tasted a lot of wines and I now I know what I like. But in the last five to maybe eight years, I think the origins of this go back pre Covid, we started to see blind wine tasting clubs. They've become very popular here, especially Amongst younger people, 20 and 30 to 30 year olds, where you have teams of blind wine tasters from all these different cities and they all compete in a round robin and the best teams come and compete in the finals. And it's quite dynamic and they're very passionate about it. That's not about conspicuous consumption at all. That's completely the opposite. So I think that pendulum or that evolution of the market has been percolating for a while now, but it's starting to pick up steam, I think more broadly across a whole new generation of consumers that are not interested in the big ticket chateau wines and prestige wines that maybe their parents generation have been, have been enjoying.
And so I would also point out, and again, this is what I was saying to you earlier, there's a lot of complexity of what's going on in China these days. The domestic production, now domestic winemaking has become very diverse and very fragmented and lots of little winemakers making all kinds of really interesting wines. And they have their pet projects and Marcellon as a grape and, and I think they're attracting a whole new cohort of younger consumers to wine in general and to wine culture in general. And they're coming in, they want to try all kinds of wacky new stuff. They're not interested in the standard classics of imported wine.
[00:10:41] Speaker A: When you say there's all these passionate little winemakers, I'm thinking, oh, we saw this in California, we saw this in Australia, and all those little passionate winemakers are now at retirement and can't find any money to sell their wineries to.
When passionate young Chinese go off and do it, is this something they're doing as a hobby and they've got another job somewhere, or are these people who are making it work as a business, what does the sector look like?
[00:11:05] Speaker B: So look, I think it runs the gamut. You have big investments being made in Ningxia, in Yunnan, in Shandong, not only by independent young Chinese winemakers, but by big companies international and Chinese.
So there's quite a spectrum actually of how the domestic industry is developing. I mean, you look at Aoyun, which is the prestige wine, being made in Yunnan, and I think trying to take on the mantle of kind of the prestige.
[00:11:39] Speaker A: That's Moen.
[00:11:41] Speaker B: That is Ao Yun is LVMH or pinary card.
[00:11:47] Speaker A: LVMH here, Mount Hennessey.
[00:11:49] Speaker B: Okay. I think it is. Yeah, yeah, yeah, yeah. Yes, it is.
And that's exciting. And it's exciting. And the wine is great. I think the wine, the price that they're commanding is being driven by the China market, not by what they might be able to sell it for internationally, but fair, fair game.
And then, and then you have folks that are, that are really are garages style winemakers in China. There's no frills, no big investment. They're working hard, they're making the wines. Them, they're very small scale. And then they go out and they're their own salesperson. They're gonna go to the, they go to wine events and trade shows and they're the, they're there talking about it and, and I saw them at Pro Wine, sorry, Food X, Food X Japan.
We'll, we'll see them at Vin Expo Hong Kong for sure in a few weeks.
And there's just great energy there. They're drawing people in and they're, they're, it's not French gentlemen, God bless them, in suits and cravats and swirling the glass and pontificating about wine. They're young, they've got tattoos, they're wearing white T shirts. There's a DJ playing and everybody's kind of bopping around and tasting the wine and getting into it. And it's very cool vibe.
[00:13:05] Speaker A: Oh, that's great to hear, especially sitting in. I'm doing this in Europe where people are not bopping around and there's not a great vibe right now. Speaking of vibes, China removed tariffs on Australian wine in 2024. And initially the shipments recovered, but then they've stabilized. They haven't gone back to the good old days. What should Australian producers take from that? Is the product wrong, the pricing wrong, or is it just the market's moved on?
[00:13:30] Speaker B: The market has moved on. It's got another. The market enthusiastically welcomed Australian wine back to China.
We've seen any number of examples of that. Not just the big boys like Penfolds obviously, but other producers as well. We work with Wera Wira. Their business in is clipping along very nicely now.
So it, it's. But the market is so different now. It's very, very different from, I mean, it's, it's radically different from 2019 and 2018. And then obviously you had the COVID years, but even, even having gotten through all of that, the economy, government regulation, the consumer beh, consumer behavior, consumer confidence levels are down. So I mean, the nature of the market is so transform.
[00:14:19] Speaker A: Okay, so let about some of those one by one, you know, consumer confidence is down. So from the outside, you know, it's not always easy to get a handle on China, even if you're very interested. But we've seen the collapse of the real estate market, young people not getting jobs, the economy slowing. Now the Iran war is, you know, putting pressure on fuel prices. How is, how, how are drinkers coping with that? What are the, have people who were drinking wine pulled back or you know, what's, what is all of this doing to the wine market? How is it reshaping it?
[00:14:51] Speaker B: Well, the other one I'll mention, which is very China specific and I don't know if it gets enough attention internationally, is in May of last year, they re announced and reinforced a somewhat dormant restriction on government officials drinking alcohol at any government function. A meeting, a conference, a banquet, a dinner, you name it. And that when that was announced In May of 2025, it was enforced very, very enthusiastically by the, all of the local branches of the government.
And it's important to just remember that in China, the government is much more pervasive in the community and in the society here.
So a dinner with a government official is much, much more common here than it would be in the United States or in Europe or in Australia.
So that had a real chilling effect on the enter again, that entertaining, banqueting,
[00:15:57] Speaker A: formal because of the extravagance of it or was that because people were intoxicated? What was driving that prohibition?
[00:16:03] Speaker B: Well, that's a good question. I think it has to do with extravagance to some extent. That was the original origin of it was the anti extravagance campaign. When that policy was first formulated back, I think it was in 2012 or 2013, it was about there was an anti extravagance measure. But I do think that it's relatively tough times here. You mentioned youth unemployment.
I think the last thing the government wants is to have government officials out and about getting inebriated in public.
[00:16:35] Speaker A: Right.
[00:16:36] Speaker B: In the current circumstances.
So it may be a combination of factors. I think it's anti extravagance. I think it's just austerity in general, austerity in the face of difficult economic times and very low consumer confidence.
So yeah, I think it's a combination of those factors.
[00:16:58] Speaker A: So what are some of the other changes that you think need to be discussed when people come to China and they've got this mental model of 2018, 2019. What are the other really big changes?
[00:17:09] Speaker B: Well, certainly we've touched on the banqueting and gifting and government, the government related consumption.
Look, I think the, the, the, the profile of, of the consumer here I get asked often, well, does the Chinese consumer respond to this or what, what, what's wine style? Does the Chinese consumer like? And, and, and I sort of have to say, look, that's like asking me what does a European consumer of wine drink, right? I mean it's just so broad.
It's. Yeah, it's so, it's so broad as to be kind of unanswerable is a question. So what you really see is a young woman, 26, 28 years old, working for McKinsey in Shanghai or a 55 year old pharmaceutical, pharmaceutical executive living in Wuhan.
These are very different consumers with very, very different behavior. So it's a, it's a complicated place. And what I do see is I would say a couple of things.
There are after all of this whole big first chapter of the wine industry in China from 1995 to now, so call it 30 years.
The aggregate consumer base for imported wine in China is still small in terms of the total universe. So we have a huge job ahead of us over the next 30 years of expanding that universe, expanding our presence with Chinese consumers all over the country.
Baijiu and beer combined as categories of beverage alcohol in China is worth roughly $330 billion.
It's a massive, massive industry. The value of wine as an imported, imported value, so not quite comparing in apples and apples, but is about 1.4, $1.5 billion compared to the 330 billion of baiji owned beer. Now at retail price, maybe that imported wine is now four billion billion or four and a half billion. But I mean you get what you get my point order of magnitude, there's a huge beverage alcohol market here that is, we're still scratching the surface.
So I think that's for people looking at addressing the China market today. We're not competing with each other in the wine category. We're trying to get a little bit of a share of the baijiu category in the beer category. Category.
[00:19:37] Speaker A: Yeah, people are often advised to go to, you know, second and third tier cities. Don't just hang out in Shanghai. But should you, if you're going to a country that you have no idea about, shouldn't you head to the, the place where all the expats hang out? What would you advise somebody who wants to enter China.
[00:19:53] Speaker B: Yeah, I don't know that it has to do with expats, but I think Shanghai is unavoidable as a major center of wine appreciation, education, consumption, venues, outlets, great retail.
You know, you can't avoid Shanghai. I mean, it is really outside of Hong Kong. It is the epicenter.
And I think it has to be addressed. I don't believe in that theory of, like, we'll just go to the secondary cities where it's easy because it's less competitive and, you know, we can find some. Some customers out there. You do that too. But I. I think it would be foolish to avoid Shanghai. It's an incredible wine market. It's very dynamic. There are wine bars and straight sh shops and all over the city.
But having said that, what I just.
You're sort of. The point that I was just making is we also have literally hundreds and millions of consumers out there that are not really properly being addressed. The Internet is starting to help with that, not only in terms of accessibility of good imported wine at honest prices, but also information and content and all of that that's starting to democratize imported wine across all of China, which is great. And it's a big. It's a big help.
[00:21:10] Speaker A: Now, one of the things that we hear in mature markets all the time that is taken as gospel is that wine is too complicated. It needs to be simplified, the language needs to be simplified. But you're talking about something different. You're talking about blind tasting clubs. I know that wine education does very well in China, that people tell me that. That locals really want the certifications and so on. So if you're approaching wine in China, should you approach it as a kind of intelligent cultural object, or should you approach it as a more of a simple beverage?
[00:21:45] Speaker B: So it's a fascinating question and I think about it a lot. And what I find is you need to address people where they are at their stage on the journey. I think fundamentally, the intellectualism of wine and the depth that you can go to in terms of knowledge and understanding and the complexities of it really, really scratches an itch for a lot of Chinese consumers. Right. They like the tea culture and all the complexity of the tea culture and where the leaves come from on the hillside and all of that. And they, and I. So I think they're. They're a natural for. They're a natural audience for that, for the great complexity of wine. But if you go to a bunch of beginners and you start preaching to them about trellising systems and soil Types and all this sort of thing, you're going to. You're going to lose them. You're going to lose them very quickly.
So I think it's about where you find people on their journey and talking to them based on where they are in their journey, which becomes hard because you need to know your audience.
You can't just churn out generic marketing material. It's a complicated question. I mean, even for me, I think I still get excited about wine because of the depth of that, that complexity and new things I can learn even after so many years and I have tons to learn.
And I think for Chinese consumers, that's a big plus.
[00:23:09] Speaker A: We used to go to conferences and we were told that you had to engage with influencers like Lady Penguin and so on. Are those days gone? What's the big thing now?
[00:23:18] Speaker B: No, I think maybe even more so, maybe even more evolved than at that time, the online space, the digital arena here is so valuable now in terms of storytelling and getting messages out in front of people, reaching consumers across this massive geography.
And equally importantly now is that because of the E commerce side of the digital environment here, consumers all over the country can get access to buy wines that in the past, maybe a winery would see their wines in Shanghai and Beijing and Chengdu, but would not see them in lots and lots and lots of other places. So there isn't a lot of point in addressing the consumers in those places because they can't buy the wines. Now with instant delivery and platforms like JD.com and Sam's Club online, there are wines available all over the country.
And the delivery platforms, logistics platforms are extraordinary to get those wines, I've heard.
Yeah, they're really amazing.
[00:24:32] Speaker A: Yes. I live in a country where there's very little digitalization. I listen with great envy to what I hear goes on in China. Well, something else is happening in China, which is that the GLP1 drugs have gone off patent this year. Are you noticing any impact on the market from those drugs?
[00:24:48] Speaker B: I am not now. Maybe I'm oblivious to those.
Maybe I'm oblivious.
[00:24:53] Speaker A: So fit yourself in. You don't need to even talk about them.
[00:24:57] Speaker B: Yeah, I'm just too old school, I think. No, I'm not aware. I'm aware of the phenomenon of the impact on consumption and what's happening internationally.
I'm not aware of that here.
And yeah, so it's not something that is being talked about, discussed across the industry here at this point.
[00:25:26] Speaker A: All right, let's turn to different markets. So your second biggest market is South Korea. I Think, and I think you've said that the ability is, is seeing record sales happening there while China struggles. So tell us about the Korean market.
[00:25:39] Speaker B: Well, we, it is our second market and we have a wonderful head of Japan based there in Seoul, whose name is Sarah and she's done an amazing job. And it's been, I think, evidence of what, what impact that can have on a business like ours and for our producers when we have somebody in Seoul on the ground, Korean speaker, day in and day out, able to engage and work with the trade and work on advocacy and so on.
So it's partly because of that and it may be that we are slightly contrarian in terms of the amount of growth that we're seeing out of Korea as a result.
But what did happen in Korea, which I think is important, and it speaks more broadly to the use of import statistics as a gauge on market behavior, is there was a big run up in shipments to Korea in 21 and into 22. I believe it was as Koreans started to drink a lot of wine at home during lockdown during the COVID period, there was a huge surge of demand for imported wine as a consequence. And a lot of the big retailers and importers there started to build up inventory at the same time. If you'll recall, there was a period where logistics became a huge problem and there were big delays in being able to get a container of wine onto a ship and shipped out to Asia. Delays of four, five, even six months.
And so on top of the overheated demand that the importers and retailers were seeing in Korea, they saw these big delays in shipping. So they over ordered and they built up a huge amount of inventory.
So if you look at shipments to Korea, it looks like there was a big bubble and then a drop.
What you need to look at though, is what the market looked like in 2019 and then carry that all the way through to 2025 and you'll have, yes, a spike and you'll have a drop. But even after that big drop, the market in 2025 is significantly bigger than it was in 2019.
So we had to absorb some of that over shipping for a period of time. But fundamentally, consumption in Korea has still been growing.
And it went, I think, from something more of a western novelty product to something that Koreans are enjoying more regularly and more enthusiastically is something more, not necessarily part of their daily life, but, but it's becoming a bit more of a, of a, you know, an everyday kind of product as opposed to this fancy special occasion Western.
[00:28:15] Speaker A: This is a really Interesting point. Maybe with China as well. These are cultures that are very ancient. They have very deeply rooted food cultures. South Korea is also one of the highest per capita alcohol consumption in the world, which suggests their local brands have got very high penetration.
So what is the, what is the pull of wine? And, and you know, wine is only a small sliver of the South Korean market, but what's making it attractive to a culture that has such embedded food and drink norms already?
[00:28:45] Speaker B: Yeah, that's a very, very good question. Look, I think in a lot of parts of the world there's a lot of conversation around the no and low phenomenon and consumers wanting to maybe moderate more. They want, they're more health conscious, they want to drink more non alcohol drinks half the time or something like that, and lower alcohol.
Interestingly here, wine is the low alcohol options, not beer.
[00:29:13] Speaker A: Interesting.
[00:29:15] Speaker B: Yeah, well, but I think wine is sort of stepped into that.
If what people are mostly drinking is baijiu, which is 52% alcohol.
Right. Wine, an imported wine, or a Chinese wine positively becomes a low alcohol option. Yeah. So I think, I think there's an element of that going on. I think it's also. Some of. It's just inertia. It takes time for, for wine to kind of get out there into the ecosystem in a market like Korea and be, be more accessible and available at retail. There was definitely, though, a catalyst for consumption in Korea, which was at home consumption. And for whatever reason, when the Koreans were at home, they felt wine was more appropriate to drink at home. Maybe it was a husband and wife thing, as opposed to the husband saying, hey, let's drink whiskey together.
Maybe there was something a bit more husband and wife at home drinking together.
I think lower alcohol is part of it.
[00:30:16] Speaker A: Do you think what we've seen in the last couple of decades of women entering the workforce into a workforce where drinking is a part of it.
Is wine more attractive in that setting where women can't drink these very heavy spirits as much?
[00:30:32] Speaker B: I absolutely think, and both Korea and China, that what we see in demand for white wine, the aromatic whites that I was talking about earlier in China, for example, New Zealand Sauvignon Blanc, German Riesling. The consensus view, I wish I had more data to back this up, but the consensus view is that, that that's in large part being driven by women. Women who are out, who are entertaining themselves or they're in a business environment or even at home.
There's a lot of. There seems to be this. Again, it's kind of anecdotal, but There seems to be a lot of examples of videos showing up on TikTok on Douyin, which is the Chinese TikTok and xiaohong chu of people cooking at home and demonstrating what they're cooking.
Not professionals. These are just sort of micro posters, micro influencers and drinking white wine.
[00:31:28] Speaker A: Right.
[00:31:29] Speaker B: Many of those, many of those posts are being put up by women. So I think there is something to that.
[00:31:36] Speaker A: Interesting. Okay, so what are people in South Korea drinking? If you had to give a snapshot of the market, what's it look like?
[00:31:44] Speaker B: Well, in terms of just wine or overall?
[00:31:48] Speaker A: Oh, give me overall, actually.
[00:31:49] Speaker B: Well, Shoju is quite big. So that's, that's the, the, the domestic Korean somewhat kind of an equivalent of what you'd see in sake in Japan or baijiu in China. So that's the clear white drink that is, you know, all, all over Korea. Every Korean restaurant, very, very popular. Beer is quite big in Korea also.
And then wine and then with wine in the past it's been more, much more red than white, kind of similar to China.
But white wine has been on the ascendancy as has sparkling wine.
And again, I think that reflects more personal preference, more individual exploration and I think recognizing also we don't talk a lot about food pairing out here because it's so complicated with Chinese cuisine and Korean cuisine and Japanese cuisine that it tends to, it tends to fall off the radar a little bit. But I think what we're also, what we would also see if we had a crystal ball and you could really look at everything that was influencing these decisions to drink more white wine. I do believe that that food pairing and suitability to Asian, certain aspects of Asian cuisine is, is going to be a factor.
Again, I don't, I don't have the data or evidence to show that, but I believe it to be true.
[00:33:15] Speaker A: So on this tour of Southeast Asia, let's talk about Japan. And Japan has some of the highest concentrations of restaurants in the world, particularly in Tokyo. So it's always been a mature market, but a much valued market, particularly for premium wine. However, it now has a very weak yen. What effect has that had on the wine market?
[00:33:35] Speaker B: I mean, there's no question every importer that I speak to is hunkered down trying to protect their core business. They're dealing with increase in cost of goods of 30, 35% just purely from a currency standpoint. So the yen was down, hovering down around 100 to 110 yen per dollar. It's now peaked at 160.
[00:33:59] Speaker A: Oh gosh that's a huge devaluation.
[00:34:02] Speaker B: It's a huge devaluation and it immediately impacts all the cost of imported wine. And this isn't a small fluctuation. I think in China, many markets you might deal with 3 to 5% over the span of a year in currency fluctuation. But to go from 1110 up to 160, I mean, you're talking about again, almost 45% increase just purely from currency in the cost of goods.
And then you have all the other inflationary effects of the last couple of years. Cost of shipping. Now cost of oil is going to affect cost of shipping.
So the Japanese importers and the trade there are really under the gun from the standpoint of cost. And it's having a big impact. Everybody I talk to there and for the most part they're kind of just hunkering down, protect the core business and try to get through what they hope is just a period of this.
[00:34:58] Speaker A: Yeah. So hopefully people will still be listening to this episode in years to come. So I don't try and make it too topical. But the Iran war, what are you hearing from where you are? How panicky are people about it or how sanguine?
[00:35:12] Speaker B: Oh, I'd say more panicky than sanguine.
I think that as it drags on the impact longer term on availability of oil, and I'm not an expert in this field by any means, but I think if it was a short term phenomenon, certainly in China they were able to buffer themselves against that with their reserves and so on. But I'm seeing it now affecting plastic supply for the toy industry. I read an article recently about, about big companies in the toy manufacturing industry in China closing their doors, shutting down completely and a whole bunch of people being unemployed as a consequence of that.
I think across the region it sort of added another layer of uncertainty and doubt and concern.
[00:36:10] Speaker A: Right, that's cheerful. Let's carry on with this tour of Asia. So India and Indonesia, I think you flagged them in the past as markets to watch, but you know, both of them, I've been watching India for 15 years now and everyone keeps saying India and yet I never see it because they've got these hideous import duties.
What do you see there, particularly in light of the fact that India is signing free trade deals with a whole bunch of countries. Is this going to meaningfully change anything? Give me your perspective.
[00:36:43] Speaker B: Yeah, I think the free trade agreements are interesting. I think I'd like to see how they're implemented and how it plays out. In practice.
But you rightly point out that the import regulations, not just the taxes, but the taxes and the regulations, the requirement for annual registrations, the fact that you have different taxes per province within India and different regulatory requirements, it's just an extremely complex environment for imported brands. We're there. Our export director is currently based in India.
So we're trying.
I think the general consensus is we're all there building foundations and with a belief that at some point, like you're saying that there's going to be a significant increase in that market.
[00:37:37] Speaker A: What gives you the confidence to say that? Because. Because I've heard this for years. News. And of course, there are some very, very popular influences inside India who it's in their interests to say that it's. It's going to be a big booming market. But what are the signs that it might go that way one day?
[00:37:53] Speaker B: I don't know that I would say it's ever going to boom. I think that's. That may be not how I would look at it. I do believe that you have very, very different from China, but you have a massive beverage alcohol market.
You have a very enthusiastic consumer.
You have a nascent, but not so nascent now growing Indian wine industry, which I think is a great thing.
I look at China's. I mentioned this already. I look at what's happening with China, Chinese wine producers as how it's diversifying now. You know, it used to be the big three kind of Chinese brands making quite simple table wine and wasn't really bringing anybody into the wine category. Now in China that's happening. I think in India that can happen as well as it evolves as Indian wine production and development hopefully evolves and matures and improves. And there's already a lot of exciting things happening there on that front.
And I guess I have a.
I don't know, maybe it's the inherent optimist in me that these high regulatory environments, that it only really moves in one direction over time, that they deregulate. It happened in China, it's happening in Thailand. And so at some point, my expectation is that it will gradually deregulate. And I think the free trade agreements are a good sign.
I think it's a very good signal of that. That usually is a country like India, their attempt to say, okay, let's try it with these guys and see what happens. And if it, you know, if it goes well, then we can expand it and we'll do more. And then ultimately we'll make this the rule of the game across the Entire industry.
[00:39:43] Speaker A: All right, so with your advisory hat on, if you were speaking to a brand with a limited budget, say from Italy or from France, and they need a new market and they need to target it, which one would you target and why?
[00:39:55] Speaker B: Life in all of Asia. Yeah, I mean, I guess if. So if you're start. If you're at a standing start, you're not present anywhere.
[00:40:04] Speaker A: You just got lots of enthusiasm and ambition. Ian, what. What would you advise?
[00:40:08] Speaker B: We like, we like those guys, so. No, I, Look, I. Maybe it's. Maybe it's because I live here and I've been here for so long, but China, to me still seems to be a land of great opportunity.
It's a combination of the regulatory environment, the diversity of the trade. You have so many options here, who you can work with. There are so many willing importers here still in China that are building their business and building their portfolios and still addressing the market, and there's still so much upside. Bearing in mind it's also still today, even after all of the declines from 2019 to now, it's still the biggest imported wine market in Asia, even today.
So I think it, it would be, I think it would be remiss of me not to say that, you know, China should be the first port of call.
[00:40:56] Speaker A: Okay, so with my, with my enthusiasm and ambition, but my limited budget, what should I not spend money on? What do you see people making a big mistake with?
[00:41:06] Speaker B: Oh, there's a lot. A lot of things.
I think what I would, what I would be very cautious about is an aggressive approach to digital online marketing.
You have to be. You have to be. Well, because it's a black hole. I mean, you can dump incredible amounts of time and energy and resource, and if it isn't very accurately targeted, for example, a producer setting up a proprietary WeChat account so that people can come to see their WeChat. And the problem with that theory is you have to populate that with an audience, and that requires a lot more money to then attract, Attract those people.
And those people come to the WeChat account, but then they realize it's only one brand. And there's only so much I'm going to see from this one brand on this WeChat account day in and day out. And so they get bored of it and they leave, as opposed to utilizing those KOLs that you were talking about earlier with their own platforms, with large followers of engaged wine enthusiasts and, and, and go via them to reach that audience instead of trying to build something proprietary from scratch.
[00:42:19] Speaker A: No, that makes sense. Okay, so which countries or which regions do you think have done a really good job?
[00:42:28] Speaker B: Well, at this point, I would say obviously New Zealand is looking good, Germany's looking good, Australia was doing very well for a long time, and there's still a major export exporter to China. Now, speaking specifically about the China market, but then confusingly, they've done very poorly in Japan. And it's an interesting phenomenon that I still to this day have not quite gotten to the bottom of.
So I think.
[00:42:55] Speaker A: Do you think it's the wines or do you think there's something about the approach which doesn't work?
[00:43:00] Speaker B: Look, I'm hesitant to speak too definitively about that because I don't feel like I've gotten myself down to the bottom of it.
But I think there it may be an example where they, they came in with a lot of entry level wines and set a very low bar in terms of quality and in terms of image. And it went into the, the convenience store chains, which in Japan are very big and, and sort of poison the well.
[00:43:28] Speaker A: Right.
[00:43:29] Speaker B: I suspect that may be at least a contributing factor that is very interesting.
[00:43:34] Speaker A: Okay, so you've got, so nimbility's got three pillars. You've got your route to market, brand building and intelligence.
So if I were to come to you with my enthusiasm and my ambition and my quasi limited budget, and I've got, say, let's say I'm, I don't know, Lugana from Italy. So I'm an aromatic white and I'm going, I hear that Sauvignon Blanc's doing really well. Riesling's doing really well.
What would you advise me? How would, how would our relationship start?
[00:44:02] Speaker B: Well, so we work with producers like that, and our relationship starts by sitting down and really understanding the nature of the opportunity for that wine in China.
Who are the retailers? Who are the outlets? Is it on trade? Is it E commerce? Is it bricks and mortar? What is the size and shape of it? What are your peers doing in the category? And we would lay out something of a roadmap to say this is how we can approach the opportunity. Here, here's the nature of the opportunity and here's how we think we can approach it.
I mean, it's interesting you raised that category because there is one of the top, top independent, influencer, slash wine sales platforms. Xiaopi, that's his top wine, is a white wine.
[00:44:49] Speaker A: It seems like the obvious next one, if you know.
[00:44:51] Speaker B: Yeah, yeah. I mean, Chenin Blanc is showing very interesting signs at the moment, South Africa in particular.
So, you know, we're, I look, I think the market is going to diversify. I think there's going to be opportunities for all kinds of different producers here. Year. It's not going to be the herd all going and following, you know, following one trend. I think we're going to see diversification and a lot of interesting success stories. But it's a much harder battle here now.
And the guys coming to the trade show saying, I'll do 10 containers. I think that's a thing of the past. It's a whole new chapter in the China market. And it's, it's.
[00:45:30] Speaker A: So you're still sounding very upbeat and optimistic.
You know, what's making you excited right now with all of these difficulties that the wine trade is in globally, why are you still full of beans in.
[00:45:45] Speaker B: Well, I see a lot of very healthy and exciting signals from consumers in China. When I'm out, when I'm talking to the trade, when we participate in wine tasting events, sometimes that might be one importer that's doing a sort of roadshow event for all of their consumers.
I see a lot of younger people coming out and getting excited about wine. And that is irreplaceable in my mind in terms of a source of optimism for the China market.
If it was all older generation folks who started drinking wine in the late 90s, early 2000s, and it's the sort of tail end of the life cycle of the wine industry in China. But what I see is a very excitable young group of people. They, they, they, they're getting into the wine, the dynamism of wine, the sociability of wine, the sociability of it is becoming a big factor too. It's, it, it is, you know, with, with this again, the 20 to 20 to 30 year olds, the Chinese producers are contributing to this. So I see a lot of energy in the younger generation. I see enthusiasm. I see people, the blind wine tasting clubs that we were talking about, all of the massive volume of government consumption and banqueting and entertaining, some of that may come back when the economic cycle turns around and we're in a more positive place from the standpoint of industry and commerce and trade and government and all of that. Some of that may come back and that's great if that does.
But I think it's fundamentally the excitement of those younger Chinese consumers that gives me great.
[00:47:26] Speaker A: Well, on that very positive note, thank you very much, Ian.
[00:47:29] Speaker B: It's my pleasure. Thank you. Felicity.
[00:47:35] Speaker A: You've been listening to Drinks Insider, the podcast that explores the intersection of beverages and commerce. Now, if you would like a summary of this episode, sign up for the Drinks Insider newsletter, which sends you the takeaways. Just go to drinksinsider.com and add your name. And if there's something you think we should be talking about, drop me a
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