VENI, VIDI, VINO!

1. National Chengchi University Marketing Management Professor Trappey Wine Consumption Habits in Taiwan and Marketing Opportunities Presented by: Fon James Joe Sarah Terry VENI, VIDI,VINO!

2. Project Background & Taiwan Wine Market Overview Hypothesis Market Research Methodology Research Analysis Conclusions & Recommendations Agenda

3. 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?

4. 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. Overview of the Taiwan Wine Market

5. Top 10 Wine Importer Country in Taiwan Source:Directorate of general customs 2004 France dominates over 50% market share of import wine

6. 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 Wine Characteristics: The Basics

7. 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

8. Methodology

9. Distribution Channels Demographic Information Consumer Behavior Decision making factors in product selection Consumer interest Product awareness Survey Instrument: Questionnaire

10. 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 Wine Market Trends

11. 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.

12. 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 Demographic Information

13. 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.

14. 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 Consumer Behavior

15. 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.

16. 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 Product Awareness

17. H3(a): Taiwanese consumers are interested in learning more about wine. H6(c): People are interested in more wine education.

18. Data Analysis

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

20. “On Trade Sales” generate higher revenues than “Off Trade Sales” • Most sales under NT$500 are via convenient stores, hypermarkets & grocery stores 1 2

21. Wine purchase frequency is not a factor of sex

22. Wine purchase frequency is not a factor of age

23. Wine purchase frequency is a factor of marital status

24. Young Adults buy wine at convenient stores

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

26. Taiwanese consumers prefer sweet wine

27. Taiwanese consumers are interested in learning more about wine

28. Conclusions

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

30. 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. Target Market:Young AdultsMen AND WomenSingle AND Married without children

31. 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. Price:NT$500-1000

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

33. Thank you for your attention! Sarah Chen 95933007 Sieu Fon Choi 95933055 Terry Lin 95933019 James Palmer 95933038 Joe Zagorski 95933045