Gauging the local demand for wine

KUCHING: It is strongly ingrained in the culture of the local folks to consume alcohol, be it homemade or store-bought.

From local flavours such as tuak (rice wine), regional favourites (like Japanese sake) to Western staples such as beer, whiskey, scotch and bourbon, the ample variety serves to sustain this culture across dining halls and homes alike.

Perhaps this also served as a growing platform for wine consumption in Kuching.

The association between wine and the upper echelons of society has been a popular conception and with the increasing disposable income level of Kuching’s middle class, there has been a growing trend in wine drinkers in the cat city.

Market research has shown that the consumption of wine in Malaysia has been on the rise reflecting the increasing interest in wine but not to the point of being a common thing on the dinner table at home.

This is due to the popular conception that wine is a luxurious item and only consumed during special occasions which tends to be public and visible.

However, Western trends have been influential on the wine market’s reach. More and more young Malaysians are learning to appreciate fine ‘wining and dining’.

The penetration power of wine in the market was also due to wine being perceived as a ‘sophisticated’, ‘classy’ and healthier alternative to other alcoholic beverages. It is also associated with health and virility.

Wine consumption has grown significantly for the past decade. Wine or other alcoholic beverages were consumed during special occasions as a social drinking habit. However this drinking habit has evolved into more mature market.

Nowadays, wine is not only just a social drink or for special occasions, but also for health reasons. For examples, red wines and cognac consumptions are growing due to the beneficial impact on the human body.

The many categories of consumers

Although there is a growth in wine consumption, the young Kuching market is still immature in wine knowledge as compared with its Peninsular counterparts.

“There has been a growth of wine drinkers in Kuching since we started a year ago and we see the trend continuing.

More and more Kuchingites now understand the characteristics of the wine that they order and not just buy it due to name and price,” noted Howard Sim, owner of Elegantly Red Sdn Bhd (Elegantly Red), a specialty wine shop that wholesales wine to a multitude of businesses in Kuching.

“With the growing purchasing power of Generation X and Y not too far behind, the increase in the wine market is benefiting from the fact that it is associated as being ‘classy’ and ‘sophisticated’.

“Our range of clients are normally from those that are already working as they now have disposable income. The younger ones do come in but generally not as often as we like, as Kuching is still a very price sensitive market.

“Adding on that, there is still a very strong preference to beer. It is still hard to educate the younger generation on the finer details in wine,” Sim stated.

He went on to hote that a majority of Elegantly Red’s clients are normally those that studied overseas and gained a liking for ‘finer things’ as they progress through their careers and want to join the upper echelon of society.

“They have the income and the understanding on how to enjoy the beverage. It also helps them connect with like-minded people and thus making it a good ice breaker to start a conversation.

“The other end of the spectrum we also have the seasoned wine drinkers who normally are in their 40s to 50s. These people know exactly what they want and are more fickled than the younger crowd as they know the characteristics that they like and even look at the details of the wine such as the year.”

Sim added that there is also a large majority of expatriates who are wine lovers as they brought the culture with them when they arrive in Kuching.

From a hotel’s perspective

One avenue where the wine industry relies heavily on, is the hotel industry.

Eric Tan

Pullman hotel general manager Eric Tan explained to the BizHive Weekly that, “In terms of demand for wine, I feel that Kuching still has a way to go. I’ve worked in many cities and as far as I fm conc rned, If you consider in terms of people who are wholly wine drinkers, it is still very small here.”

Tan explained that for hotels, Pullman has a minimal of 25 types of wine in its repertoire but so far “anything above the RM300 range is moving very slow” Tan noted.

“Of course apart from that we have our own house wine (the most basic wine).

“Within the hotel itself, our French wine is our top seller with red wine being the favoured type compared to white. Most wine drinkers usually prefer red as white they would usually use it as aperatif and pairing of the food,” he added.

Looking at demographics on the hotel side, Tan further elaborated that a large majority of the wine drinkers are foreigners.

“Pullman has a fair share of foreign guests at roughly 40 per cent. Out of these 40 per cent, 10 per cent are wine drinkers, which is a majority of our clietele already.

“This means our local wine drinkers are a bare minimum. The only exception is during wedding banquets where locals would invest in wine during the dinners,” he explained.

Many ways to go

Howard Sim

On the whole, Sim of Elegantly Red opined that for a city the size of Kuching, the wine market still has many ways to go in terms of volume.

“At the moment, we are wholesaling over 1,000 cases a month which is still considered very small for a city the size of Kuching. Shifts in the consumption patterns are hard to predict as consumer preference appears to be dictated by local and regional traditions.

“The predominately Chinese driven market usually take wine during special occasions such as weddings and new years and the young see this as a ‘special event’ drink more than anything else. There has been studies on the benefits of wine but due to perception, it is still a slow growing trend,” Sim stipulated.

In terms of preference, Sim highlighted that red wine is still the preferred wine class with Merlot being the top few wines that Kuchingites tend to consume. As it is still a growing industry locally, most Kuchingites do not normally buy it by region or year but more by type, be it a Cabarnet Sauvignon or a Shiraz.

“Like i’ve mentioned, it is a very slow growing trend and locals here have yet to understand the characteristics of certain wine from certain regions. There are also elements to consider such as whether or not it is new world or old world, how long was it aged, what barrel did they use and so forth.

“Then the wines themselves depending on location have their own unique traits, for example, Chilean wines are dry due to conditions there while French wines have a higher tannin content.

“These factors (and others like soil conditions, weather pattern) really does play a role in the taste and quality of the wines but based on my personal observation, locals here have yet to appreciate these factors,” Sim explained.

From his observation, Pullman’s Tan attributed this to difference in lifestyle as the percentage of youngsters exposed to the overseas environment is still minimal.

He also highlighted another observation stating that, “the price sensitivity of the market here also poses a problem for the wine industry, especially for hotels as hotels have to do a certain percentage markup. So at the end of the day, people would rather purchase wine from wine sellers or wine shops.

On wine investments, Tan also expressed his opinion that, “based on the pace it is going at Kuching, it is still very much behind places like Kuala Lumpur or Singapore. Very few people here truly appreciate the value of a good wine. My boss for example collects wine and has his own cellar.

He added, “Good wines can range in the thousands but due to market factors here, not many people would opt for it hence we try to cater a decent range that is still relatively affordable based on the local market. Kuching is still extremely sensitive to price.

He gave examples of the price sensitivity of the market by noting that the hotel’s top range currently includes the Chateau Lagarde but the sale is pretty slow.

“Our best seller so far is our Australian wine from Barossa as it is cheaper. On the white wine side, Chablis take up is decent but still minimal.”

Knowledge and education

Tan has narrowed down the issue to wine knowledge and education. The manager believes that with the rising upper middle class in Kuching, not many of those understand or truly appreciate the value and feature of a good bottle of wine.

“Normally, here, the banquets are Chinese sets and we use general wine. For wine pairing (for the type of food that you eat), it is a bit different which I would intend to do sometime in the future. But then again, that would be very specific so that must be accompanied by a wine connoisseur.

“This is something I personally want to sometime in the future to further boost the appreciation of wine locally and maybe help nudge the industry in the right direction,” he enthused.

On the response of the plan however, Tan mentioned that he believed it would be positive and would also help stimulate the dining experience of the city as it was something new as none of the hotels were doing it.

“In Kuching, none of the hotels have a ewine butler f while if you go to bigger cities they have a person specifically in charge of wine and would try to pair the wine with your food.

gThis would give the city something new to try and indirectly enable us to educate more and more Kuchingites on the details of the wine and maybe build their appreciation towards it too.”

On another note, Tan admitted that the sale of wine currently only stands at about 50 bottles per month which is very low in term of total capacity.

Only the hotel’s house wine which changes fairs a little bit better due to the lack of wine knowledge here and the pricing of the wine.

“On average we would be selling anywhere between 250 to 300 bottles. On a monthly basis we would be ordering roughly 400 to 500 bottles as for our executive floors we do provide wine free of charge during cocktail hours and wine is also used as a corporate gifts for certain level VIPs over here.

“So in terms of total average sale, it would only constitute to less than 20 per cent of our alcoholic beverage sales with bulk still being beer.”

Sparkling wines like Champagne has similar to lower sales than wines noted Tan as wine could be consumed during dinners while Champagne like Moet and Chandon were usually consumed for special celebrations, cocktail parties and birthdays.

“But personally i think it also depends on the clientele as my assumption of the champagne drinkers are those of the younger crowd. Wine drinkers are usually from the more mature crowd as they appreciate and know the quality of the wine while champagne is more of an aperatif or even a celebratory drink.

“As i have highlighted, i think it boils down to education which is what I am trying to improve.

“Wine education and knowledge is very limited here. I’m trying to to arrange something with some wine suppliers as well as some parties from overseas like Singapore, Thailand and Vietnam to see if there is an opportunity to promote their wines over here together with a wine expert.

gSo it would be a wine tasting cum dinner to educate people on the characteristics and quality of the wine, h Tan exclaimed.

gI fve worked in other hotels in other countries before and they would have something similar to this every quarter where they invite wine experts to explain. Currently it is still in the planning stages as it is very slow over here in Kuching as the take up rate is nominal. It really depends on the crowd and volume.

“In order to justify the cost of flying a French wine expert to the city we need a minimal amount to justify the cost.

“While working for other hotels, I used to do wine dinners together with wine pairing and at the same time introduction to wine. Another problem is that restaurants here do not allow smoking – or else we would be able to pair it with tobacco or cigars,” he said.

While stationed in Hanoi, Tan has tried a wine pairing with Chinese Vietnamese food with great success as most food nowadays are moving towards fusion, said the manager.

On the local front, the closest thing Kuching had to a proper wine dinner was the Prestige gala dinner in 2011.

“We did it with a supplier of Moet & Chandon in conjunction with the launch of Pavillion Service Residence as well as the Rolls Royce Ghost. The take up rate for the event albeit being invitation only, was full and Tan admitted that he ‘would love to have another event similar to that’.

Tan stated that for the industry to improve and for it to be a sustainable business, “i think we have to further educate and further push the wine industry here and perhapes pair wines with local dishes to add a more unique touch to it.

“Without knowing the wine, people do not know the value, and if there fs is no value there would be no demand. So i am a firm believer that the first step has to be creating awareness and educate the increasing upper middle class on the finer things and create more demand for this.

“After that then maybe we can start moving towards the direction Singapore is heading and maybe even consider about it being an investment.”

Wine as an investment

KUCHING: Wine is not just a drink of choice. Some consumers have purchased wine for the sole reason of investment, noting the rarity of obtaining a particular bottle could fetch thousands over the years.

Elegantly Red’s Sim said, “These components combined dictates the quality of the wine and also dictates the demand.

“An example of this is where people are willing to pay top dollar for a good bottle of wine. Back in October 29, 2010, three bottles of Chateau Lafite’s 1869 vintage each sold for HK$1.8 million (US$230,000) making it the world’s most expensive 750ml bottle of wine.

“Some wine lovers and collectors overseas just look at the brand name, vintage year and would not bother about price as they know it is a safe investment,” he enthused.

Fine wine from internationally recognised vineyards such as Chateau Lafite are like gold bullion, rare coins, fine art and collectable trading cards  – playing the role of alternative investment options, other than the traditional financial holdings of stock, bonds cash or real estate.

Sim however, added that due to the niche nature of the investment, it has yet to gain popularity here as most Kuchingites do not know the value of a good wine.

“Most people that visit my establishment tend to buy wine for immediate consumption and only a rare few would buy for keeps. Those that do would normally be those that know what wine they want and because they know the wine is good, would buy a few cases for themselves to be presented as gifts or to be drunk during social occasions.

“Some more hardcore wine lovers would even buy a case for themselves and would refuse anyone else to drink it,” Sim highlighted.

“For the moment, there is a growing trend among locals towards the wine culture but it is still slow. We normally see women taking whites such as dessert wines as they are easy to drink and relatively sweet.

“We also see red wines being paired with foods at hotel restaurants but other than that, it is nominal.

“We have yet to reach a stage as Kuala Lumpur or Singapore in terms of the wine market here and even further behind before we could even think of using wine as a feasible investment.

“It is not that we do not have good wines here, but due to the culture and price sensitivity of the market, it is not feasible for a business to invest into something where the demand is so limited.”

The type of occasion, for instance, whether it is a party, a special occasion, or an intimate dinner, can significantly influence the motives for wine consumption.

Different consumption situations could be modeled to specify in what way diverse characteristics are used by the same person in different situations.

Situation are related to the ‘consequences’ they produce holds especially true in asian culture. For example, as they want to impress someone, the consumer would purchase expensive brands.

To impress business client or even celebrate important occasions such as weddings, dinner parties or anniversaries or birthdays, the hosts will normally opt for a high price and reputable brand.

Therefore, most of the times that wines consumed at home are lowest expenses in spending for wines such as drinking at home for relaxation or for cooking.