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Wine trade show loses sheen despite China market growth

THE world's largest wine and spirits trade show, Vinexpo, returns to Bordeaux this year amidst a great amount of economic uncertainty, yet organizers remain upbeat that the show will be a rip-roaring success and more Chinese visitors are expected to attend.

The exhibition, which first ran in 1981, is held in Bordeaux every two years and elsewhere in the world on alternative years. The show runs from June 21 through June 25, and is expected to welcome 40,000 to 50,000 visitors. The 2007 Vinexpo Bordeaux drew 50,433 professionals from 154 countries and regions.

Last year's Vinexpo Asia Pacific was held in Hong Kong and was attended by about 6,800 visitors from across Asia, with 692 exhibitors from 32 countries and regions.

Alarm bells have been ringing of late, and the wine industry has seen the recession take huge chunks out of its profitability in recent months. Industry leaders such as Foster's, for example, have already announced large scale cuts in their global operations. Likewise, the show has already been rocked by some big name pullouts, such as Constellation, Gallo and Torres.

The Chinese market, however, continues to be a great source of optimism for potential growth, and producers are hoping their strategy of courting the second most populous nation pays dividends. During a recent press conference to announce the exhibition, Vinexpo Chairman Xavier de Eizaguirre presented the "12th Global Study on Current Trends in the International Wine & Spirits Markets and Outlook to 2012."


The study, commissioned by the London-based International Wine and Spirits Review, once again suggests that wine consumption in both the Chinese mainland and Hong Kong will increase by 2012 up to about 36 percent from last year's 76 million cases. The value of wines consumed is also expected to increase over the same period by 57 percent, up from about US$3 billion in 2008.

The value figures in the report are calculated with an average fixed parity of all currencies involved against the US dollar and do not take into account the impact of last year's abolition of wine taxes in Hong Kong.

According to chairman de Eizaguirre, the figures take into account the recent economic downturn. "2009 will of course be an atypical year and the repercussions on world wine and spirits consumption are under constant discussion. However, the trends for the period 2007-2012, when smoothed over the five-year period, show that the impact of the present crisis on the wine and spirits industry will be limited in overall terms."

Over the past decade, wine companies have invested heavily in emerging markets such as Brazil, Russia, India and China, known collectively as the BRIC countries. While there are a number of similarities, such as the increased consumption of both domestic and imported wines and the urban concentration of consumers, China's edge lies in its evolution of gross national product and the buying power of potential customers.

Still, participating in the 40,000-square-meter Vinexpo exhibition has been deemed superfluous by some producers, including Spanish giant Torres. According to a spokesperson, the pull-out was not a long-term strategy and the money saved will be channeled toward assisting growers.

This sentiment was echoed by Torres China General Manager Alberto Fernandez. "We also see the number of visitors to Vinexpo dropping considerably (this year). In the previous editions it was a good way for meeting most of our worldwide agents and key media, and trade people within just a few days, but with the current travel cost-cutting it is not going to be a cost-effective investment for us."

Fernandez pointed out that Chinese visitors to the show generally look for brands without distribution; Torres is already present in 145 countries.

The company's marketing efforts in Chinese, however, will be increased rather than cut. "Our sales so far are almost the same due to our focus on branded wines rather than in classified growth from Bordeaux," he said.

"We see this year as the most important for the next five years as we can conquer market share in many channels and cities and enjoy very good growth in coming years."


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