Advance Australia Fair – Summary Introduction The Advance Australia Fair Country of Origin (COO) project collected qualitative and quantitative data from frequent ‐buying consumers, wine importers and retailers in seven countries (US, UK, China, Vietnam, India, Korea and Indonesia). The final report comprises five separate volumes and runs to more than 450 pages. Copies are available on request from Wine Australia. Eight summary documents have been prepared to provide an overview of the report’s key findings. One looks at the overall project; the others examine each of the markets individually. This document provides a brief summary of the findings for Vietnam. It is designed to be read in conjunction with the overall project summary. There are two sections, covering consumer and trade research. Each includes qualitative and quantitative findings. In each section, there is also a summary of some of the detailed economic analysis and modelling. Additional information to assist in interpreting the measures used and the data is provided in appendices to the full report.

General findings Overall perceptions of Australia Data analysis across all countries reveals that Australia’s country image overseas is generally positive. We are ‘liked’ because of assumptions about or experience of our humour, our easy‐going nature and so on, and it is certainly always better to be viewed positively than negatively. However, these are not generally positive associations for the producers of fine wine. For instance, the French are largely believed to be ‘snobbish’, ‘rude’ and ‘arrogant’. Not ideal perhaps if you’re selling holidays in France, but for selling a high‐priced, premium product these attributes are strongly congruent with consumer expectations. There are no ‘modest’ or ‘humble’ luxury brands with a ‘good sense of humour’. They simply would not be in the luxury category if they were. All countries and country nationals have positive and negative country image associations, and these can be informed by both real, objective country knowledge and hearsay. However, they are formed in the minds of consumers and these often stereotypical impressions can strongly affect consumer opinions. The strongest COO influences on purchase behaviour are linked to the degree of ‘congruency’ or ‘fit’ in the minds of consumers between what they think a country (and its people) can produce and the product or product category under evaluation. For example, a country like Iran may not have any positive country associations, but it has developed special expertise over thousands of years specific to making exquisite, hand‐knotted silk rugs. These command a high price and are highly desirable around the world, despite any negative COO‐based feelings. The questions put to wine buyers (consumers and trade) internationally were: Can Australia produce a fine wine (consistently, reliably) or, indeed, any high‐quality products? Are Australian winemakers skilled and knowledgeable enough? Do they understand quality, and are they passionate about quality, as the French or the Italians are believed to be? Are there other high‐quality products made in Australia that support their ability to make fine wine? Unfortunately, the opinions gathered suggest that the response to these questions is generally ‘No’ rather than ‘Yes’, particularly as compared to ‘old world’ wine producers, especially France and Italy. However, a number of opportunities to improve this perception were also identified.

Positive key words for Australia and First, it is important to understand that, unlike many industrialised first‐world countries, Australia has what is called a ‘single dimension’ country image (country brand personality). This means that when a person overseas thinks of Australia, or any of our products with the exception of products such as merino wool, lamb or beef, they ‘halo’ their beliefs with the stereotypical images aligned with our geography, climate, movies/advertisements (Crocodile Dundee, for example) and native animals. These associations are consistent, clear and strong. Even those who have visited Australia and ‘know’ Australians generally support these stereotypes. Hence it is necessary to leverage the most positive associations that can be manipulated to support premium positioning, and considered uniquely our own. These descriptors can be reinforced and communicated via imagery, key words and headlines/positioning statements, and branding. A review of the average scores for the items used to quantify Australia’s different COO aspects (country, wine, people, food personalities) and affective responses show that there is strong and largely consistent support for terms that include:  bold  strong  exciting  prosperous  authentic  sincere  charming  honest  imaginative/innovative  down to earth. Also when people think of Australia, they tend to feel:  happy  enthusiastic  pleased/excited. There are also negative reactions to Australia, such as angry, bored etc. Moreover, in some markets we are also associated with terms such as lazy, racist and party‐loving, but fortunately, these negative associations have no influence on perceptions of fine wine fit; that is, of our ability to produce fine wine. Hence while no strategies should be put in place that could be seen to reinforce such associations – indeed every effort should be made to distance Australia and our from these associations – they don’t seem to pose a distinctive threat to perceptions of Australian wine quality.

Consumer research in Vietnam Qualitative findings The first stage of the study was to conduct focus groups in each country. These were conducted by specialist research consultants according to a consistent interview guide. Locals were used to ensure consumers would feel free to say what they thought without fear of offending any Australians in the room. What follows is a summary of the findings of three focus groups conducted in Ho Chi Minh City in 2014. The research reported here was conducted as a pilot study based on a set of preliminary questions that were then revised for the rest of the countries.

The three focus groups were designed to investigate the traits and behaviours of Vietnamese wine consumers belonging to several discrete age segments. These segments were 18–‐29 years old, 30–42 years old, and 45–55 years old. These three focus groups featured five, six and seven individuals respectively. This method sought to reflect Vietnamese culture’s typically high values of collectivism and power distance. Participants were aged at or above Vietnam’s legal drinking age of 18, and reported purchasing and consuming foreign wine at least once a month. Each focus group lasted between 1.5 and 2 hours, and was conducted in Vietnamese, with the relevant findings translated into English by Dr Vinh Lu. Information regarding consumers’ preferences for various wine attributes, perceptions of quality arising through country of origin, and imagery associated with Australia was collected.

The following are some key observations from the focus groups in Vietnam for Australian wine exporters:  Drinking wine is seen as ‘trendy’ and is an important part of business relationship building activities.  Consumer tastes remain eclectic, and consumers have low to medium knowledge of wine quality and sources. Very often consumers rely on prices as an indication of product quality.  Supermarkets appear to be a common/popular source of wine supply.  Country of origin (as shown by ‘From viticultural areas blessed with suitable land and climate’) appears to be one of the most important indicators for the ‘perfect’ wine.  French wines remain the number one source of ‘best’ wine, due to the colonial past of Vietnam and the very established market presence of French wineries.  Chilean wines are surprisingly popular in Vietnam.  Country image and country person image for Australia remain positive, with no surprise findings.

Table 1: Vietnam country rankings

Country Mean score (out of 10)

Group 1 Group 2 Group 3 France 9.75 10 9.71 Chile 8.25 7.8 9 Spain 6.25 6.4 8.6 Italy 8.25 7 8.86 Australia 8.75 7.8 7.86 USA 6 6.33 7.33 New Zealand 6 8 6 South Africa 7.5 2.5 5.6

Quantitative findings As well as asking wine buyers their opinions about Australia, our wines and our people, we also investigated their perceptions of their own cultural congruence with Australians, because it is expected that when people feel a cultural affinity with others they are likely to be more trusting of their products and services. Other potential moderators measured included wine involvement and subjective (self‐assessed) wine knowledge. These aspects were investigated to determine whether wine was an important product to them (in their lifestyle), they considered themselves to be well informed and knowledgeable with respect to wine, and these considerations would influence the effects of COO associations. In general, influences found were small and largely insignificant, meaning that the power of COO was robust to consumer wine knowledge, involvement with wine and cultural affinity with Australia. Aside from their impressions and beliefs about Australia, wine buyers were also asked a number of broad based questions relating to where they hear about wines and general consumption. Some of these data are provided in this summary; Part 3 of the full report provides the comprehensive results. Table 2: Sources of information for wines purchased

Relied on sources of wine information All countries Vietnam Scale of 1 to 7 N=2017 N=294 (1 = not important, 7 =very important) Mean s.d. Mean Word of mouth (family, friends, work) 5.29 1.391 5.10 Wine tasting 5.12 1.662 5.32 Liquor store or wine store 5.11 1.452 5.06 The internet (brand sites or wine region sites) 4.84 1.689 4.99 Visit to a wine region 4.74 1.853 4.76 Wine region information, brochures and maps 4.67 1.681 4.86 Newspaper or magazine advertising 4.56 1.644 4.63 Wine club 4.56 1.917 4.77 Going to a wine show or trade fair 4.52 1.836 4.97 Online wine retailers 4.47 1.732 4.36 Wine writers or bloggers 4.44 1.747 4.76 TV advertising 4.44 1.671 4.48 Wine shows 4.43 1.880 5.02 Tourism centres 4.21 1.832 4.33 Billboards and/or road signage 4.18 1.775 4.17

Table 3 illustrates how Vietnamese wine consumers view the percentage chance that Australia can produce the ‘ideal’ or best possible wine. Results reflect focus group indications that France is a clear leader, with Italy ahead of the rest in second place. Chile performs relatively strongly. Table 3: Perceived likelihood a country will produce the 'ideal' high‐quality wine All countries % Vietnam % Wine producing N=2017 N=294 country Mean s.d. Mean France 70.88 24.560 82.23 Italy 62.58 25.682 67.15 Spain 57.54 25.672 62.08 US 57.28 26.646 60.27 Australia 55.88 25.920 58.11 New Zealand 53.60 25.839 57.29 Chile 52.82 26.854 59.97 Argentina 49.46 25.854 53.03 Australia’s ranking 5th 6th

Summary of models – COO constructs What follows is a summary of the beta statistics for the mediated and moderated regression analysis completed. (See Appendix 2 for an explanation of how to interpret the model statistics.) Two models were investigated:  The first tested the power of Australia’s country personality (CP) to influence fine wine fit (FWF) directly, and through the potentially mediating variables of Australia’s wine (WP), people (PP) and food (FP) personalities.  The second tested the purely emotional effects of Australia’s evoked country‐based emotions – how people feel when they think of Australia, our wines (WE), our people (PE) and our food (FE) – on fine wine fit. The potentially moderating influences of consumer wine involvement, subjective (self‐ assessed) wine knowledge and perceived cultural congruency with Australia were also tested. Analysis of this testing is not included in this summary but results can be found in Part 3 of the full report. As found in the qualitative work, Australia has a consistent and strong country image, with both positive and negative aspects. Interestingly (and importantly), the negative aspects of our COO stereotype were not found to have a significant effect on FWF. However, they may be more damaging in terms of influences on business‐to‐business relationships. Traits such as ‘lazy’ and ‘laid back’ are detrimental to our international reputation as desirable business partners. For a full explanation of the variables used in the models, see Appendix 2 to the full report. The questions asked that related to Australia, our wine, our people and our food included in the survey were used to determine the degree to which Australia’s country, wine, people and food personalities, and the emotions they evoked, influenced beliefs regarding Australia’s ability to consistently produce fine wines. The following discussion relates to the first model investigated. It shows Australia’s country personality (CP) as the driver of the subsequent mediating variables of wine personality (WP), people personality (PP) and food personality (FP). In other words, people first form in their minds their overall perceptions of Australia and then, drilling down from this, they consider our products (in this case wine), the types of foods we eat (expected to contribute to our ability to produce fine wine, based on the qualitative data) and our people (are we capable technically of making fine wine – and do we have the skill, history, love and passion to do it?). These three ‘mediating’ variables each make their own distinct contribution to FWF: the congruence between perceptions of us and the concept of excellent, high‐quality wine. We know that countries like France and Italy are deemed highly congruent with fine wine. This is due to their long history in making wine, the number of premium wine brands (and other premium brands across a spectrum of luxury goods) that come from those countries, and strongly held, consistent beliefs that their national cuisines and the skills of their people and personalities are all congruent with the production of fine wines.

Overall results – total sample Testing all COO personality constructs together reveals a strong and positive influence of country personality (CP) on wine personality (WP), people personality (PP) and food personality (FP). These variables all substantially and significantly moderate the relationship between country personality and fine wine fit (FWF), with an overall R2 of 0.49. Logically, wine personality is the strongest mediating factor – it’s also important to note the strong direct effect of CP on FWF, even when the mediating variables of WP, PP and FP are present. Hence, testing confirms the influence of COO associations with consumer perceptions of Australia’s abilities to produce a fine wine, with a substantial R2 outcome of almost 50 per cent. All relationships are highly ‘statistically significant’, meaning there is less than a 5 per cent*probability that the test outcomes are purely by random chance (*p < 0.05). While the mediating factors are by far the most important drivers, even their presence does not render the direct influence of country personality insignificant, although its influence is minor once they are introduced. Figure 1 presents results across all countries; Figure 2 shows results for Vietnam alone. Figure 1: Influence of country personality via wine, people and food personalities on fine wine fit (all countries)

Wine Personality a=.75*** b=.66***

Country Direct effect, c’=0.21** Fine Wine Personality Fit

People a=0.70** Personality b=0.31* **

Model summary:

a=0.70** b=0.16* Food Fine Wine Fit; R2 = 0.49, Personality F(4,2012) = 503.89, p=<.001 N = 2017

Indirect effect, ab(wine personality)= 0.49, 95% CI [0.36, 0.62] Indirect effect, ab(people personality)= 0.22, 95% CI [0.11, 0.31] Indirect effect, ab(food personality)= 0.22, 95% CI [0.01, 0.22]

Figure 2: Influence of country personality via wine, food and people personalities on fine wine fit in Vietnam

Wine Personality a=.79*** b=.51***

Country Direct effect, c’=.33NS Fine Wine Personality Fit

People a=.93*** Personality b=.31 NS

a=72**** b=.40* Food Model summary: Personality Fine wine fit; R2 = 0.38, F(4,289) = 43.54, p=<.001 Indirect effect, ab(wine personality)= 0.40, 95% CI [0.03, 0.77] Indirect effect, ab(people personality)= 0.29, 95% CI [0.01, 0.59] Indirect effect, ab(food personality)= 0.29, 95% CI [–0.04, 0.69] Figure 2 shows: • Positive influence of country personality on wine personality, people personality, and food personality.

• NO direct influence of country personality on fine wine fit.

• Positive influences of wine personality and food personality but no influence of people personality on fine wine fit.

• Mediation: There is only a significant indirect effect of country personality on fine wine fit through wine personality and food personality.

These results are similar to those from China, and illustrate the influence of perceptions of food on fine wine fit.

Trade research in Vietnam Qualitative findings The following is a brief summary of 12 in‐depth interviews conducted by market research consultants in and Ho Chi Minh City. Those interviewed had been in business between three and 16 years and sold a variety of wines from numerous countries (‘old world’ and ‘new world’), including Australia. Interviewees were a mixture of importers and retailers, but all were decision makers with respect to the wines stocked and provided to their customers. As indicated by the respondents, the wine market in Vietnam lives up to its reputation as an emerging and potentially important wine market for Australian exporters, with increasing consumer awareness and knowledge about wine. However, the respondents also stated that wine sales had been impacted by the recent economic downturn. [Note: Interviews were conducted in May 2014. Interviewees also noted that the competitive intensity in the wine market is very high, due to government control over wine imports and changes in consumer demand and preferences.] Red wines dominate the Vietnamese market, with approximately 70 per cent of market share. Notably, an average consumer does not have great knowledge about wine, and those importing the wines and selling them have quite low levels of knowledge also. Working professionals, who are typically open‐ minded, well‐educated and well‐travelled, have emerged as an important market segment for wine retailers. In addition to individual consumption and personal gifts, corporate gifts represent a key market segment. The most popular occasion is the Tet festival (approximately 10 days to two weeks of celebration of the Lunar New Year), which generates as much as 80 per cent of wine sales for some importers/retailers from around September to around February of the following year. During this period, companies tend to spend a large amount of money on wine orders as end‐of‐year gifts for their employees as well as business partners. Consistent with the findings in the consumer focus groups, the interviewees generally agreed that France produced the best wines in the world. According to them, consumers tend to associate fine wine with wines from the Bordeaux region. In recent years, however, consumers have started to look at the ‘new world’ wines, especially those from Chile and Australia. While Chilean wines appear to be doing surprisingly well in Vietnam, the interviewees provided some mixed to positive views about wine produced in Australia. Once again, Chile seems to be considered more ‘consistent’ in the quality of the wine it produces, with good quality for the cost. In terms of professional working relationships, the interviewees indicated their preferences to forge relationships with foreign partners for their professionalism, honesty, and integrity. Australians, in particular, have very positive country person image, which is a very important asset. Looking to the future, tax and widespread corruption pose significant challenges for both retailers and importers alike. For each container of wine, wine importers pay approximately 10 per cent (of the value of the container) as a ‘lubrication fee’ to customs officers to facilitate a speedy processing of the wine containers. For products to be sold in certain restaurants or supermarkets, the retailers have to pay certain ‘back door fees’. Some respondents stated that this is a national problem and they must comply with bribery demands. In terms of relationship building, Vietnamese wine importers and retailers emphasised the importance of flexibility (ability and willingness to accommodate changes) and channel support in their loyalty with the suppliers and the longevity of the relationships. Following are some specific comments made in relation to Australian wine. • Australian wines are consistent in quality. The most popular will be Australian wine priced around 180,000–280,000 VND [$10–16 AUD].

• Australian wines are somewhere in between French and Italian wines. They’re light and gentle to the taste buds. • Australian wines have become popular in recent years. Australian wines are easy to drink with a beautiful aroma. They appeal even to difficult customers. For products of the same price range, Australian wines taste better than French wines.

• Australian wines are not as sophisticated as French wines, for their shorter history. Australian wines taste lighter.

• Australians do great wines.

• Australian wines are ok. Some have excellent brands with international awards. Many don’t taste so great though. Their prices are still quite high compared to French wines, taking into account the geographical distance to Vietnam.

• Australian wines are good, but people don’t know much about them. Customers tend to try more at restaurants.

Quantitative findings As with the consumer studies, broad questions regarding country preferences for imported wine were explored with the trade survey. Those surveyed were responsible for buying decisions. In total, 102 usable surveys were completed. The entire sample across all seven countries was 762. The table below shows responses to the question: ‘What is the percentage chance ‘X’ country can produce the best quality wine?’. Results for the entire sample and for Vietnam are shown in Table 4. Respondents were asked what percentage of their stock was usually Australian, their perceptions of quality and their stock levels were analysed. The results in Table 5 show that, as you would expect, there is a strong correlation of almost 0.8 between their perceptions of how good our wine is and their stock levels. Table 4: Percentage chance of producing high‐quality wine

Vietnam All countries N=762 Country of origin N=102

Mean s.d. Mean France 28.52 18.595 28.75 Australia 14.95 11.741 13.46

Italy 15.08 10.891 12.37 New Zealand 8.08 8.214 4.78 Chile 13.18 11.986 26.81 US 12.85 11.946 8.14 Australia’s ranking 3rd 3rd

Table 5: Relationship between perceptions of quality and stock levels

% of % of % of % of %of % of Wine source stock stock stock stock stock stock French Australian Italian NZ Chile US Best quality wine is from France .697 Best quality wine is from Australia .752 Best quality wine is from Italy .678 Best quality wine is from New Zealand .508 Best quality wine is from Chile .750 Best quality wine is from US .745

In Vietnam, Australia now accounts for about one‐eighth of all wine sales, sitting third with a 12.85 per cent share. However, this is well behind France (31.30 per cent) and the surprisingly dominant Chile (31.10 per cent) The following is a summary of the total effects for the models depicting the antecedents of fine wine fit (See Appendix 2) and likelihood to recommend Australian wine to their customers. Similar to our exercise in the consumer survey, we tested the power of Australia’s country personality (CP) to influence fine wine fit (FWF) directly, and through the potentially mediating variables of Australia’s wine personality (WP), people (PP) and food (FP) personalities. We then extended this model by including the behavioural component of likelihood to recommend Australian wine as the ultimate dependent/outcome variable. (See Appendix 3 for a full explanation of how to interpret the models.) Figure 3 shows the results for all countries (N=762). Findings reveal that both our wine personality and the degree of belief in our ability to produce fine wines are very impactful in terms of whether or not Australian wines will be recommended to customers. However, it is important to note that all of Australia’s personality dimensions make a significant and strong contribution to this overall outcome. The importance of the perceptions of our people is particularly evident. Figure 3: Direct effects of country personality via wine, food and people personalities on fine wine fit and likelihood to recommend Australian wines (all countries N=762)

Country Personality .78*** .13***

Food People .74*** Personality Personality

.13***

.58*** .25***

Wine

Personality

.68*** .47*** Likelihood Fine Wine to Fit .22*** Recommend

***: significance at p < .01 (99% confidence)

COO dimension R2 values People personality .60 Results show that all relationships are Food personality .71 significant and that the overall impact Wine personality .81 on any change in the variance to Fine wine fit .46 recommend Australian wines is 41 per cent. Likelihood to recommend .41

Vietnam (N = 120) impact of likelihood to recommend Australian wine to customers

Figure 4: Direct effects of country personality via wine, food and people personalities on fine wine fit and likelihood to recommend (Vietnam only)

Country Personality .44*** .23**

People Food .68*** Personality Personality

.26**

.23*** .27***

Wine .17* Personality

.39*** .33***

Likelihood Fine .23** Wine to Recommend Fit n.s.

***: significance at p <.01 (99%); **: significance at p < .05 (95% confidence); n.s.: non‐significant

CCO dimension R2 values People personality .19 Food personality .47 Wine personality .58 Fine Wine Fit .15 Likelihood to recommend .36

The results shown in Figure 4 suggest that our Vietnamese data conform to the relationships proposed in our original conceptual model, except that: • there was NO influence of fine wine fit on the likelihood to recommend Australian wine (similar to the findings from the Chinese and Indian sample).

While fine wine fit is significantly influenced by country personality, people personality, food personality, and wine personality, the R2 value is small, at 15%. Notably, for Vietnamese wine businesses, the impact of country personality is extremely powerful in determining their likelihood to recommend Australian wines. More specifically: • country personality directly and significantly influences the likelihood to recommend (much like the situation in China and India). • country personality indirectly influences the likelihood to recommend via Australian food personality.

These two variables (CP and FP) explain 36 per cent of the variance in the wine businesses’ likelihood to recommend Australian wines.