Market Disruption in the Trade

How we buy wine is changing in ways both predictable and surprising. This month we take a look at what those changes are, what they mean for us, and how they will affect the Dongguan cognoscenti.

Ladies of the night and law-makers, explained the “Lao Ban Niang”, will be your best agents. This was my first experience of market disruption in the Chinese wine trade.

I was sitting on a leather sofa in a windowless faux-bar. That’s to say, it was a room designed (artfully, I must admit) to look like an up-market wine bar, complete with shelves of real and expensive Bordeaux and Burgundy, and a sturdy brick-and-oak bar. The western illusion was only broken by the obligatory Kung Fu tea table at which we sat. This was the corporate hospitality room of a huge but little-known wine importer. Definitely not a household name.

Seeing my jaw slacken somewhat, the boss went on.

Young women from all over China flock to the south-eastern boomtowns. Some hope for lucrative white-collar jobs. Other girls, particularly with lower educational attainment, have already accepted their gloomy future in KTV, along with all the extra opportunities which present themselves to the high-heeled, long-legged karaoke DJ.

Ladies of the night and law-makers, explained the Lao Ban Niang, will be your best agents. This was my first experience of market disruption in the Chinese wine trade.

These women, trading on their glamour, need a back-story for their families; a way to explain the lives they are living far from the village and—most of all—the money they send back to their home-towns, often putting a younger brother through university or financing a new business back in the “Laojia.”

Their jobs, and of course the extra opportunities, often bring them into close quarters with wealthy, inebriated businessmen, some from mainland China, others from the near-diaspora—Greater China, including Hong Kong, Singapore, Taiwan and even Malaysia, as well as the occasional “Laowai.” Often, their male singing partners find themselves less than able to perform in a later, more intimate duet. This is where the magic happens. Face is saved, more money is exchanged, and the fa?ade of the alternate career (the one that appears on WeChat moments) is substantiated.

“Never mind. It happens to everyone sometimes. Hey, you like French wine? I have a bottle here—my friend is a ‘Guilou,’ and he gives me the wine.”

This is just one example to illustrate that the way we buy and sell wine is changing. Bigger things are happening around the world as well. Naked Wine is a market disruptor offering a new way to bypass the merchants and buy wine direct from selected producers. And it’s fortunately not limited to the impotent post-karaoke carouser. “Angels” invest 20 GBP every month and in return get “insider pricing”—as much as 50% off retail prices—from participating wineries. Sadly, and perhaps predictably, China is not a current market.

Closer to home, online stores are starting to be noticeably successful, even in the notoriously Chinese-illiterate expat community. Perhaps the most famous here is LiquorTown which until recently, sold red, white and rose? wines as cheap as 50 RMB for a bottle delivered. It’s fair to say that LiquorTown has made a bit of a splash here—with some Dongguan folks delighted to get wet, and others clearly displeased with the pugnacious marketing on social media and the rambunctious personal style of its head honcho, Jay Robertson. In the end, LT’s disruption provided enough turbulence to persuade him to take the wine offline. (They still sell Liquor and Whisky online though.)

A more recent entry to the market, and a Dongguan-based seller, is 51Italy which offers a growing range of Italian wines along with other imported produce, seeking out real quality and debunking the “Italy as a bulk wine producer” fallacy. Nogogo runs a more supermarket-oriented model, including a decent range of wines, and is seeking to emulate the biggest grocery brands as a true one-stop-shop. The Johnny-come-lately in Dongguan is Wilkinson—a wine and deli store opening in June, with a selection chosen by a WSET qualified expert. (Full disclosure: Your humble reporter is that expert.) HERE! is also already in the game with its current HERE! wine shop and upcoming imported grocery WeChat shop which will be launched in a month’s time.

Maybe these online outlets will drag us out of the limited (and frankly unpleasant) aisles of Carrefour, Wal-Mart and those alike and expand the way we think about buying wine. We shall see, but disruption—like winter in Westeros—is coming.

The entrepreneur in the faux-bar I mentioned above had thousands of agents all over China and was doing a roaring trade. In the end, I never recruited a single seller for her. Perhaps I don’t spend enough time with law-makers. (She never got around to explaining why they make good agents too.)

Alec Forsyth started selling wine in France over twenty years ago, and is a proud holder of the Wines and Spirits Educations Trust (WSET) Higher Certificate in Wines and Spirits. He has been the head buyer for a local Dongguan wine merchant since 2011, and has been selling imported wines to the Dongguan cognoscenti for several years.