Dynamics of Wine Consumption in China: an Empirical Study

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Stream no 9. Marketing and Communication

Competitive session

Dynamics of wine consumption in China: an empirical study

ABSTRACT: China may not be the first country that comes to mind when people think about wine consumption or production; however, the wine market is undergoing dramatic change. The recent increase in wine consumption in China has significant implications for researchers and the business community both within and outside of China, given its growing population and the rising purchasing power of the middle class.

Using quantitative research methods, this paper examines the factors affecting wine purchasing decisions in China. This study reveals the intrinsic attributes-seeking segment in China. Furthermore, it finds rising income, gender and overseas experience to be key drivers of frequent wine consumption. Moreover, new media is recognised as an increasingly important information channel for wine promotion.

Key words: Wine consumption, Intrinsic attributes-seeking behaviour, Marketing strategy, China

Acknowledgement : This study is supported by a research grant from Faculty of Law, Business and Creative Arts, James Cook University.

INTRODUCTION

Given recent economic changes and the rise of China’s middle class, this ancient country is

undergoing a social transformation. One of the striking changes is the rapid increase in wine

consumption. China has become the world’s third largest red wine drinker in terms of total volume

consumed in 2011, after France and Italy. Chinese adults are reported to drink 1.4 litres of wine per year,

and are expected to increase their consumption, as its growth has also been driven by rising average

incomes, the growing influence of Western eating and drinking habits in China, particularly among the

young and wealthy Chinese consumers in urban areas (International Wine and Spirit Research, 2013). .

As Chinese wine consumption increases, imports of foreign wine are growing too. This fast

growing market has become very attractive to many vineyards internationally. Some rich Chinese buyers

are even considering buying red wine as a new type of speculative investment to counter inflation (Ni,

2011). France, Australia, Spain, Chile, Italy and the US, have accounted for more than 90 per cent of

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China’s bottled wine import in the past two years (China Customs Statistics Yearbook, 2012; 2013).

Wine imports witnessed a four-fold growth from 2005 to 2010 (China Customs Statistics Yearbook,

2006; 2011). Strong demand for imported wine is believed to have been contributing to this growth, as well as the reduction in tariffs following China's accession to the WTO.

This demand for wine is noticeably in a key group of consumers, namely, G2 consumers. G2 refers to Generation 2, born after 1980, confident, independent and determined to display the independence through their consumption of new things. The G2 cohort is thought to be the most westernized consumers to date, emphasising enjoyment in life (Barton, Chen, & Jin, 2013). They are young, well educated, rich and prone to regard expensive products as intrinsically better than less expensive ones. Therefore, G2 consumers tend to consume not only more wine, but also more expensive wine than other consumers.

This fast growing wine market has aroused the interest of academics. Previous studies show that

Chinese consumers perceive wine to be a fashionable drink, as well as a status symbol and sign of upper social class (Camillo, 2012; Hu, Li, Xie, & Zhou, 2008; Liu & Murphy, 2007; Balestrini & Gamble,

2006; Jin, 2004). However, as the Chinese market is large, dynamic and made up of, in fact, many different markets, large scale, up-to-date research on wine consumption issues is vital. Unfortunately, such research is rare at the moment. This study aims to fill in a gap in the literature by developing insight into the drivers of wine purchasing in China today. This paper tries to answer four important questions. 1) Who is the wine consumer? 2) Why are Chinese consumers buying wine? 3) What are the most influential factors affecting purchasing behaviour in China? 4) How can the market be segmented?

Answers to these questions are invaluable for marketing and strategic planning purposes.

LITERATURE REVIEW

Although Western wine is relatively new to the majority of the Chinese, wine itself is not. Wine production started in China more than 2000 years ago, in the Yellow River region (www.winechina.net).

Constrained by soil and weather conditions, grape wine production in China had been far behind that of other alcoholic beverages, for example, those that are distilled from grains. However, it is the scarcity that leads to wine’s favourable image among Chinese (Camillo, 2012; Liu & Murphy, 2007; Jin, 2004).

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There are two possible explanations for this scarcity: 1) in ancient times, only royal families, senior

officials and the rich had privilege to drink wine for important occasions, which made wine a royal or

noble drink (www.winechina.net); and 2 ）China had to import wines from foreign countries due to

limited domestic production and unsatisfied demand, which made wine a symbol of mystery and

exoticism. These can be easily seen from many ancient poems. Therefore, wine has had a positive image

even before the arrival of foreign wine.

Gradually, wine in China has evolved as a means to show one’s hospitality and as a lubricant to

social communications (Li, Jia, Taylor, Bruwer, & Li, 2011; Balestrini & Gamble, 2006). In addition,

wine’s country-of-origin (COO) serves as a symbol of face and social status, when Chinese buy wine as

a gift or for special occasions (Somogyi, Li, Johnson, Bruwer, & Bastian, 2011; Hu et al. , 2008; Zhang,

Casswell, & Cai, 2008). Moreover, researchers have found that COO affects consumers’ purchasing

decisions when they have limited wine knowledge (Jin, 2004).

Several other factors influence Chinese consumers’ choice of wine. For example, its health-

related attributes, particularly in maintaining a healthy cardiovascular system, are regarded as a main

reason to drink wine. Some Chinese consider wine drinking as a way of taking good care of their health,

referring to traditional Chinese medicine theories (Somogyi et al. , 2011). Interestingly, some older

women believe drinking red wine is helpful in maintaining youthful good lucks (Zhang et al. , 2008).

Moreover, less alcohol content in wine is believed to be healthier, compared with the high alcohol

volume of Chinese liquor (Liu & Murphy, 2007). In addition, effective translation and transliteration

strategies, whereby brand names have positive connotations, have increased the appeal of foreign wines

(Wilson & Huang, 2003).

The predominant focus of research on Chinese wine consumers has been on the influence of

wine attributes on consumer behaviour. Wine attributes have important implications for market

segmentation, positioning and marketing communication. The literature on Chinese wine consumption

has its strengths, but also weaknesses. First, many studies have based their conclusions on a limited

sample. For example, studies have focused only on well-developed cities in China, such as Hong Kong,

Shanghai, Beijing, Hangzhou and Guangzhou (Yu, Sun, Goodman, Chen, & Ma, 2009; Hu et al. , 2008;

Wilson & Huang, 2003; Liu & Murphy, 2007). Others have studied special consumer groups, such as,

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Chinese residents in Adelaide (Somogyi et al. , 2011) and Chinese immigrants in the US (Guinand,

2005). Secondly, most of the studies have used descriptive statistical analysis or analysis, for example, Li et al. (2011); Camillo (2012); Goodman, Lockshin and Cohen (2007); Wilson and Huang (2003); and

Balestrini and Gamble (2006). However, it is worth trying other methods or techniques to gain more insight into the market. Last, segmentation studies of the Chinese wine market are practically non- existent. Market segmentation is common in wine marketing (Spawton, 1991; Keown and Casey, 1995;

Bruwer, Li and Reid, 2002). Clusters in a new, emerging wine region have been identified and the need for further research highlighted (Kolyesnikova et al., 2008). The concept of market segmentation is well established and easy to understand. Product benefits sought by consumers is one key segmentation variable (Kotler and Armstrong, 2004; West, Ford and Ibrahim, 2006), along with lifestyles (Bruwer, Li and Reid, 2002) and age (Haverila, 2012).

This research has been designed to fill gaps in the literature; it employs econometric modelling and cluster technique to provide in-depth insight into this promising market. The objectives of this study are as follows:

(1) To investigate the factors that influence wine consumption in China, more specifically, the

impact of demographics, purchase occasion and wine attribute preferences on consumption

levels of wine.

(2) To investigate whether feasible market segments exist in the Chinese wine market based on

behavioural segmentation.

RESEARCH METHODS

This study adopted a quantitative approach and used the logit model and cluster analysis approach. The two methods were chosen for theoretical and practical considerations (Boatwright &

Stüttgen, 2012; Chintagunta & Nair, 2011; Kaufman & Rousseeuw, 2009; Scott & Knott, 1974).

The logit model is widely used to model dichotomous outcome variables. In this study, the dependent variable takes two values to indicate whether a consumer is a frequent wine buyer or a less frequent wine buyer. In the binary model, we assume that the decision (to be a frequent wine buyer or

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a less frequent wine buyer) depends on an unobserved utility index (threshold) that is determined by

explanatory variables in a way that the larger the value of the index Ii , the greater the probability of the

consumer to be a frequent wine buyer (Pi ). Let us define the index Ii as

′ Ii = xi β + i

In this study, some demographic and economic variables are used as independent variables. In

practice, Ii is unobservable. If the threshold is set to zero, what we can observe is a dummy variable yi,

y = 1 if I > 0 i i yi = 0 otherwise

Cluster analysis is a class of statistical techniques that can be applied to data that exhibit

“natural” groupings in marketing (Everitt, Landau, Leese, & Stahl, 2011; Hagerty, 1985; Girish &

David, 1983). It sorts through the raw data and groups them into clusters. A cluster is a group of

relatively homogeneous cases or observations. Objects in a cluster are similar to each other. This

technique is used to segment the wine consumer market in China based on the wine attributes sought

by Chinese consumers as well as the sources of information used in the decision making process.

DATA

A wine consumption survey was conducted between October 2012 and January 2013, by

means of a self-administered, online and highly structured questionnaire. By administering the survey

online, and guaranteeing confidentiality, it counteracted potential obstacles relating to the collection of

sensitive data in a culture characterised by high ‘face’ consciousness. This survey covered both

Chinese consumers in urban China and overseas, as the latter are potential consumers and possibly

influential opinion leaders to others around them, when they go back to their country (Chaney, 2001).

Given the rapid adoption of the internet, online surveys are becoming a viable method of data-

collection. Internet research is appealing because it is a cost- and time-efficient way of accessing a

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large number of participants (Sue & Ritter, 2007). Furthermore, China has the world’s largest online population with 129 million residential broadband accounts in 2011 (McKinsey Global Institute, 2013).

The questionnaire was first developed in English and discussed with professionals in the field of consumer research and other related sectors. This was later translated into Chinese and pre-tested on randomly-chosen male and female consumers from different age and income categories in China. This random population commented on the content and design of the questionnaire, especially on the length and structure, thus leading to a shorter and more user-friendly version.

To evaluate wine consumption patterns, the survey questions addressed frequency of wine purchasing; the prices paid for wine that was bought for different occasions; purchasing outlets used; consumer attitudes towards wine attributes; influential information sources and demographic and socio-economic data, such as occupation, income, education, marital status, presence of children in the household, etc. A total of 407 valid questionnaires were returned. The results were analysed using

SPSS (Pallant, 2005).

In order to measure product attribute preferences, a seven-point Likert scale items ranging from 1 (very important) to 7 (very unimportant) was used and most items were adapted from previous studies (Balestrini and Gamble, 2006; Liu and Murphy, 2007; Goodman, 2009; Yu et al., 2009;

Camillo, 2012). Binary logistic regression is used when the dependent variable is not continuous but instead has only two possible outcomes, 1 or 0. The outcome variable in this case, frequency of consumption, had to be recoded into a binary/dichotomous measure. It was recognised that collapsing categories is problematic and researchers should seek to avoid subjectivity (Squires et al., 2001).

With regard to cluster analysis, a hierarchial cluster analysis approach was initially adopted to determine the number of clusters (using the dendrogram, Ward linkage method and Squared Euclidian distance measure) and this was followed by the k-means cluster technique. One of the most difficult issues in cluster analysis is the determination of the number of clusters, as there is no objective criteria for making the selection (Kaufman and Rousseeuw, 2009; Everitt, 2001; Bruwer et al., 2002;

Kolyesnikova et al., 2008). Hence, the authors were guided by the literature and used common sense and practical judgment as recommended by Hair et al., (1998). A review of the literature by

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Kolyesnikova et al. (2008) found that the number of clusters varies in different studies from four to six.

Furthermore, the results of any clustering procedure are not definitive. Afifi, Clark and May (2004:

440) state that “Usually, the major decision as to whether the cluster analysis has been successful

should depend on whether the results make intuitive sense”. Assessment of heterogeneity in cluster

analysis is vital (Haverila, 2012). To test the validity of the classification, the one-way ANOVA test

was run, which indicated (at 0.001 significance level) that the segmentation of the three clusters was

satisfactory and robust.

Table 1 shows the descriptive statistics of the sample. In this sample, the average age of respondents

was 33. The age profile of the sample shows that it is not a general population sample, but is a wine

sample and representative of the G2 generation, born after 1980, now aged 33 and over.

RESULTS AND DISCUSSION

Firstly, gender, age, marital status, household income, and overseas experience were applied

in the Logit model to see if they had the power to influence wine purchasing frequency. Results are

listed in Table 2. Statistical testing shows that this model is statistically significant (chi-square =

27.435, ***p < .001 with df = 5). Furthermore, the validity of the model is verified by the Hosmer and

Lemeshow Test (chi-square =2.243, at the significance level of .973).

The Wald criterion demonstrates that gender, household income and overseas experience are

statistically significant in affecting wine purchasing frequency in China. This means: 1) male Chinese

are more likely to be a frequent wine buyer than a female Chinese; 2) people with higher income are

more likely to purchase wine frequently; and 3) overseas experience contributes positively to more

frequent wine purchasing behaviour. The Logit model in this study shows age and marital status are

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not statistically significant in wine purchasing frequency in China. To sum up, a simple portrait of a wine buyer in China is a rich male with overseas experience.

Secondly, cluster analysis was carried out on two sets of wine related variables: wine attributes and wine information sources. Wine attributes consist of different aspects of wine (see

Figure 1). The information sources cover a wide range of sources (see Figure 2). All the attributes and sources were placed randomly in the questionnaire. The respondents were asked to rate both sets of variables on a seven-point importance scale.

Results for clustering based on wine attributes are shown in Figure 1 and Table 3. Chinese wine consumers are clustered into three segments, namely, extrinsic attributes-seeking consumers, intrinsic attributes-seeking consumers and traditional consumers, based on their responses to the importance level of 14 wine attributes. Behavioural variables (benefits sought) were selected as criteria for cluster formation since the literature highlights the importance of these factors in wine consumer behaviour. The three segments were found to be statistically different from one another. The three-cluster solution was regarded as appropriate as the group sizes were reasonably large. The literature identifies key criteria for effective market segmentation which includes measurability and substantiality (Kotler and Armstrong, 2004). As mentioned earlier, Chinese consumers with limited wine knowledge tend to favour wine from famous wine growing regions. In this study, a group of

Chinese consumers seeking extrinsic attributes was discovered, in line with previous studies. After the clusters were developed, the next step was to build detailed profiles of each segment and uncover differences and similarities among the segments. Cross tabulation was employed to determine whether statistically significant differences existed among the three clusters with respect to demographic characteristics and wine consumption levels (Table 4 reports the results of the chi-square analyses).

Unlike previous research, a group of Chinese consumers was identified: the intrinsic attributes-seeker. This group values the taste and quality of wine more than its COO. A similar result was seen in a blind wine taste test among Chinese consumers living in the US (Guinand, 2005). As

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these consumers are living in the US, under the influence of western culture, they are regarded as

different from general Chinese consumers. Consequently, our study is the first academic study to

reveal the intrinsic attributes-seeking behaviour among wine consumers in mainland China. This study,

along with the trade literature, challenges the stereotype of Chinese consumers as novice consumers

who lack wine experience. The study shows the dynamic nature of the Chinese wine market and the

recent emergence of the knowledgeable wine consumer.

To support the above finding, other evidence was obtained from the survey. Table 5 reports

wine price range for different purchasing purposes. While the majority of wine purchasers select the

low price range (between 50 and 300 RMB), there is a sizeable number of consumers that are willing

to pay more for premium wine (over 300 RMB or AU$55), particularly when buying wine for

personal consumption. Buying expensive wines as a gift is not new; however, the fact that Chinese

consumers are buying expensive wines for private consumption is interesting. The intrinsic attributes-

seeking behaviour identified can possibly explain this phenomenon, that is, the Chinese wine market is

getting more mature, where price and country of origin is not necessarily seen as the main indicator of

wine quality.

Furthermore, a group of alcohol-seeking consumers is also found in China. They are named

“traditional consumers”, because traditional Chinese alcoholic beverages contain a high level of

alcohol. To this group of consumers, drinking wine is simply a means of getting satisfaction from

alcohol consumption (Yu et al. , 2009). Traditional consumers tend to be the older people, such as 55

years old and above.

Results for clustering based on information sources are shown in Figure 2 and Tables 6 and 7. Wine is

an experience product, meaning that prior to purchase, consumers do not know whether or not the

wine will meet their needs. In order to reduce risk, consumers will rely on quality cues (Lockshin,

Cleary and Rasmussen, 2000) as well as information from impersonal (e.g., media, advertising,

reviews) and personal (family, friends, salespeople) sources of information (Dodd et al., 2005).

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Therefore a decision was made to use sources of information as a criterion for cluster formation. The analysis reveals three important information channels: traditional word-of-mouth, traditional media and new media/social network. Not surprisingly, living in a country with a collectivist culture, Chinese tend to trust authorities and people they are familiar with, such as families and friends when making wine purchasing decisions. They are named the “traditional word-of-mouth sourcing consumers” in this study.

Traditional media such as print advertisements, product labels and TV are common tools in the marketing communications mix, and they remain useful tools in the Chinese wine market. In addition, the importance of the new media and social networks in wine promotion cannot be ignored.

The study highlights the emergence of wine consumers who seek information from new media and social networking sites, which is not surprising given the rapid development of social media in China recently.

CONCLUSIONS AND IMPLICATIONS

This study is an initial attempt to identify various segments that exist in an emerging wine market such as China. The study reveals distinct groups, in particular, the intrinsic attributes-seeking segment. The intrinsic attributes-seeking consumers identified in this study, implies Chinese demand for quality wine. There are a number of possible explanations, but until empirical work is completed, they will remain as speculation. This demand for quality could be a result of 1) the opening up of the

Chinese economy and 2) years of wine marketing and sales promotions in China (such as, wine training courses, educational campaign, wine tasting and etc.) which have helped Chinese consumers know wine and its varieties; 3) as more Chinese people travel overseas (as business people, travellers, students, etc.), their exposure to different cultures will result in new knowledge and greater wine tasting experience, leading to the demand for high quality wine. As a result, it is not surprised to see the gaps between Chinese wine consumers and their western counterparts closing. Given this trend, the fierce, price-based tactics used to sell Australian and New Zealand wine in China may not be a

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smart way of marketing wine (Zhou, Tian, Wang, Liu, & Cao, 2012). Instead, the marketing focus

should be on how to meet this emerging demand and how to build up brand equity and brand loyalty.

This study highlights rising income, gender and overseas experience as key drivers of wine

consumption in China. The overseas experience phenomenon suggests links between the experience

economy (tourism) and the real economy (wine sale). For example, a wine tasting tour in Australia

and/or New Zealand is not only a tourism activity, but also a marketing campaign. As a result,

Chinese consumers will possibly pick up wines produced in Australia and/or New Zealand after their

tour, when confronting a bundle of selections. Being exploratory however, this study raises more

questions than it answers. For instance, the exact nature of overseas experience needs to be examined

in future research. How should this concept be measured? Does overseas experience influence wine

knowledge, level of involvement and brand preferences? Perhaps overseas experience simply reflects

core values which are more predictive of wine consumption behaviour? According to Cleveland,

Kalamas and Laroche (2005: 208), the combination of independent and dependent measures into a

single instrument (and lack of temporal ordering to non-experimental data) places limits on the degree

to which true cause and effect relationships can be ascertained. Mixed methods (combining in-depth

interviews with survey research) or experimental designs are needed in the future to test the influence

of overseas experience on wine consumption behaviours.

In addition, new media is recognised as an influential information channel for wine promotion.

Although new media is still new in China, it is becoming more important as a channel for information

exchange, especially among G2 consumers. Therefore, communications, public relations and

promotions through various new media platforms is essential to wine marketing in China.

This study had a number of limitations. A sample size of 407 is not representative of China

given its population of 1.3 billion. Hence the small sample size limits generalisation of the findings.

While the internet survey collected data from people across a wide geographical area, a larger sample

size would have provided more scope to identify the influence of region on wine consumption

behaviour. Future researchers could consider using purposive sampling approaches and designing

regionally differentiated studies as China is a diversified culture in terms of cuisine, language dialects

and socio-economic factors. Furthermore, the research relied on self-reported answers and the validity

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of responses in online surveys is an issue for some researchers. Surveys rely on respondents’ memory and not actual behaviour. Collecting accurate data on frequency of wine consumption is inherently problematic, as consumers tend to underestimate how often they consume alcohol. The data collection method runs the risk of self-selection bias, in the sense that perhaps only respondents who are highly involved with wine feel sufficiently motivated to complete the survey. The clusters identified in this study require further analyses. According to Afifi, Clark and May (2004), clustering techniques have their limitations. They should be used in an exploratory manner and as a first step in generating scientific hypotheses. Several concerns also exist regarding the use of Internet-based surveys. There is no control over who responds to the survey and an exact response rate cannot be calculated. Other potential problems are coverage bias (the fact that some people do not have access to, or choose not to use the Internet) and respondents’ lack of familiarity with Internet tools (Solomon, 2001).

In conclusion, this research is a wide-ranging survey of 407 Chinese consumers that identifies segments and key drivers of wine consumption. It is viewed as a springboard for future research into an emerging wine market that shows robust growth.

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Tables and Figures

Table 1 Basic statistics of survey samples at regional level

Gender (% of male Age Average income per Region No. respondents) average month (RMB) Pearl River Delta 66 65.2 39 14,159 Yangtze River Delta 101 42.6 32 14,970 Central 62 50.0 33 18,250 Northeast 98 33.7 34 9,680 Midwest 47 48.9 28 9,345 Overseas 30 40.0 29 12,000 Total 407 45.8 33 13,086 Note: Overseas include samples from Hong Kong, Macau, Taiwan, Australia and the US. The average income may be affected by number of samples from university student, who don’t have regular income source.

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Table 2 Results of Logit regression

95% C.I.for EXP(B) B S.E. Wald df Sig. Exp(B) Lower Upper Gender * .577 .213 7.334 1 .007 1.780 1.173 2.703 Age .240 .158 2.315 1 .128 1.271 .933 1.732 Married -.115 .273 .176 1 .675 .892 .522 1.523 Income * .160 .064 6.313 1 .012 1.173 1.036 1.329 Overseas * .488 .247 3.902 1 .048 1.629 1.004 2.643 Constant -1.117 .366 9.326 1 .002 .327

Note: Frequency of consumption was recoded into two variables, where frequent = 1 (n = 237), which means ‘more than once a week’; ‘once a week to twice a month’; ‘once a month to twice a quarter’; ‘once a quarter to twice a year’. Non-frequent = 0 (n = 170), which means ‘once a year to once every two years’; ‘less than once every two years’.

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Table 3 Clustering Chinese wine consumers based on wine attributes

Segments Wine Attributes Extrinsic attributes-seeking Comes from a respected, foreign wine growing region; Produced in a consumers (n =329 ) foreign country; Is red in colour; Award winning products; Older, mature-age wine; Grape variety; Design of package; Intrinsic attributes-seeking Value for money; Taste good – sweet and fruity; Offer a health benefit; consumers (n = 28 ) High quality ; Brand name Traditional consumers High alcohol level; Produced in China (n =50 )

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Table 4: Clustering Chinese wine consumers based on wine attributes, demographics and consumption frequency

Clusters Variable Extrinsic Intrinsic Traditional Chi Square Cluster Cluster (50) (329) (28) Gender Male 146 11 28 Chi-Square = Female 183 15 21 2.936 Sig. = .230 Age 18-24 38 7 5 Chi-Square = 25-34 165 15 22 17.888 *Sig. = .013 35-44 100 2 17 45-54 24 2 2 Over 55 2 0 3 Education no attempt 32 5 8 Chi-Square = university 3.800 Undergraduate 131 12 20 Sig. = .434 Post-graduate 166 11 22 Marital Yes 214 10 33 Chi-Square = Status No 115 16 16 7.693 *Sig. = .021 Married with Yes 153 6 21 Chi-Square = Children No 176 20 27 5.769 Sig. = .068 Household < 5,000 RMB 89 16 12 Chi-Square = Income 5,001 – 10,000 101 5 17 15.567 RMB *Sig. = .013 10,001 – 30,000 109 4 14 RMB More than 28 1 6 30,000 RMB Overseas Yes 100 4 10 Chi-Square = experience No 229 22 39 4.359 (lived or Sig. = .113 worked overseas) Frequent Yes 205 0 32 Chi-Square = wine No 124 28 18 41.970 consumption *Sig. = .000

*indicates a significant level at p=.05

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Table 5 Wine price range for different purchasing purposes

Price Range for Private As a Gift % Special Occasion or Price Range per bottle Consumption % (n=296) (n=237) Celebration % (n=236) Below 50RMB 9.5 4.2 19.5 38.5 44.7 50-100 RMB 51.7 41.6 27.8 101-300 RMB 19.1 301-500 RMB 7.1 11.4 5.1 501-800 RMB 1.4 7.6 3.4 801 -1500 RMB 1.0 3.0 .8 Above 1500 RMB+ 1.0 1.3 .4 Sum of 300 RMB+ 10.5 23.3 9.7

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Table 6 Clustering Chinese wine consumers based on information sources

Segments Information sources Traditional word-of-mouth (n =259 Product reviews; Recommendations by others Traditional) n media sourcing n =120 ) Print advertisements; TV advertising; Product labels New media/social network sourcing Websites; Social networking sites; Wine tasting, wine (n = 28 )

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Table 7 Clustering Chinese wine consumers based on information sources, demographics and frequency of consumption

Clusters Variable Traditional Traditional New Chi Square WOM media media/social (259) (120) networking (28) Gender Male 115 59 11 Chi-Square = Female 144 60 15 1.017 Sig. = .601 Age 18-24 32 11 7 Chi-Square = 25 -34 123 64 15 15.265 *Sig. = .038 35-44 86 31 2 45-54 16 10 2 Over 55 2 3 0 Education no attempt 28 12 5 Chi-Square = university 3.264 Undergraduate 98 53 12 Sig. = .515 Post -graduate 133 55 11 Marital Yes 169 78 10 Chi-Square = Status No 90 41 16 7.598 *Sig. = .022 Married with Yes 120 54 6 Chi-Square = Children No 138 65 20 5.283 Sig. = .071 Household < 5,000 RMB 64 37 16 Chi-Square = Income 5,001 – 10,000 79 39 5 17.862 RMB *Sig. = .007 10,001 – 30,000 90 33 4 RMB More than 26 8 1 30,000 RMB Overseas Yes 80 30 4 Chi-Square = experience No 179 89 22 3.557 (lived or Sig. = .169 worked overseas) Frequent Yes 167 70 70 Chi-Square = wine No 92 50 28 43.192 consumption *Sig. = .000

*indicates a significant level at p=.05

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Figure 1 Clustering Chinese wine consumers based on wine attributes

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Figure 2 Clustering Chinese wine consumers based on information sources