I recently wrote an article about the Beijing market for an upcoming issue of Wine Business International. It includes insights from a handful of industry players who work for companies that span top-ten distributors to small retailers. One of them is Helene Ponty, who moved to Beijing nearly three years ago to handle importing, marketing and sales of wines produced by the family winery in Bordeaux. The excerpts below include comments she made that I couldn’t fit into the article. For more of Ponty’s insights, and those of others in the China trade, see Wine Business International.

On Beijing market trends…

“In terms of growth, this year it seems like the Beijing wine market, and the north China wine market in general is a little slower than places such as Guangzhou, Shenzhen, Shanghai and Chengdu. From my experience and observations, it also seems like the Beijing and north China market are tending toward cheaper wines, ideally less than rmb100 per bottle. Many distributors have asked me for wines around rmb30 wholesale, which for us is impossible. There are similar demands in other markets, but it is the strongest in Beijing.”

On the impact of the government austerity programs…

“When I arrived here 2.5 years ago, people kept telling me the market was best for expensive wines, that I needed to increase the price of my wines. Packaging was also almost more important than the wine itself. A nice box could sell any wine.

“Then the government austerity program hit and all of a sudden many companies that solely had government customers shut down. Other distributors that survived stopped purchasing new wines to observe where the market was going and get rid of their existing inventory first.”

“Since the spring of 2014, I feel like the market is slowly getting back on its feet, but has shifted a lot. The demand is now high for cheap wines. I have had discussions with well-established distributors in the north who told me they are specifically looking for French wine at rmb30, which is unfortunately very difficult if not impossible to offer considering the Euro exchange rate and import taxes.”

On the changing nature of fake wines…

“One unexpected consequence is in regards to fake wines. I used to see a lot of fake Bordeaux / French wines in Beijing because people wanted to sell a French wine, with a name that could not be tracked on the internet, for obscene margins. After the government crackdown, I expected this to stop, and for people to start buying real regularly priced wines. However, distributors who were used to having those obscene margins were not willing to give them up and now want to do fakes wines but really cheap French ones.”

On a maturing wholesalers market…

“For the next two years, I think we will observe some consolidation and a higher level of expertise at the wholesale level. Consumers will expect more than just a friendly connection, they will expect someone who can actually recommend good wines. I strongly think that the average price of a bottle of wine will go down as distributors start to accept more reasonable margins. When I arrived in China it was normal for a distributor to charge 200 percent or 300 percent margins, instead of 30 percent as seen in France and elsewhere. I now have some of my customers moving to those “more reasonable” margins. This will help make better wines affordable to consumers.

On Beijing’s preference for beer and spirits such as baijiu…

“I believe this situation will change because baijiu has a growing reputation as being unhealthy while wine has one of being healthy. However, I think it will take one generation to fully see the effects in north China because men in their fifties are too used to drinking baijiu.”

“We will have to watch as people currently in their twenties and thirties move into their forties and fifties — maybe they will drink as much wine or more wine than baijiu. It might also be, and is already happening, that whisky and cognac will be very popular in Beijing, maybe even more popular than wine. A sign that this might happen is that when I visited Gansu, many wineries there said they now want to make brandy, not just wine.

On newcomers to the Beijing market…

“You need to be very patient. It will take you a long time and most likely quite a bit of money to be successful. It took me more than eighteen months to get a good enough understanding of the market.”

“Do your research carefully. China is not one market, it is a multitude of small markets and Beijing is one of them. Maybe Beijing is not the right market for your wines, maybe it is. Currently it is easier to break into the market with entry level wines. If you cannot offer such wines, you might want to consider other cities. The taste profile of your wine also matters. I barely sell any bottles of my white wine in Beijing, but it is extremely popular in Guangzhou.”

“Ask your potential distributor or importer what channels they specialize in, and go look at those places, or ask other people in the industry about those channels. If they specialize in government customers, they are probably in a difficult situation. If they sell to KTVs [karaokes], the quality of your wine might not be their main concern, but they will want a good packaging and a good Chinese name.”