Belen Sanchez, co-founder of Sarment China, explains why businesses cannot expect to arrive in China and sell large amounts of wine just because they exist.
“When we came here we realised there is so much to do,” enthuses Belen Sanchez, co-founder of Sarment Wines, speaking about the brand’s recently launched retail concept in Shanghai.
“When we were starting to travel here to China, we realised that not only are the most affluent people really interested in wine, but everyone was truly embracing western habits and the European lifestyle. But conversely, there was a huge lack of knowledge, service and availability of quality wine.”
“In the past there has been a big trend of dumping the worst vintages in the country. And when you go to a wine store, rarely can anyone tell you the difference between two bottles. So starting in Shanghai, we really want to revolutionise the way that wine is perceived in China.”
Their first major move in the market is the launch of the Sarment flagship, a retail destination for wine enthusiasts in Shanghai, which also features a wine lounge and restaurant. The store will showcase a sommelier-picked wine selection, sourced directly from winemakers across the world.
Though only launched in late 2012, the concept is already being planned for launch in Chengdu and Beijing. We spoke with co-founder Belen Sanchez, to gauge the current health of the Chinese wine market and learn more about their retailing concept, which follows the codes of a luxury goods boutique.
“ Historically there has been a big trend of dumping the worst vintages in China. Rarely can sales assistants explain the difference between two bottles ”
How would you describe the overall health of the fine wine industry?
Overall the wine industry is on par with the world economy, which means far from great. Aside from very few top luxury brands, the wine industry is suffering from lack of growth and economic dynamism in its key markets.
Competition is fierce and visibility is very difficult to achieve, also the taste of consumers is very fragmented.
So you need to have a lot of resources, smart marketing and a good distribution network to help you to survive. Asia, and particularly China, is the only market that is growing significantly and it is the single reason why the overall wine segment is still growing.
Which markets are driving the most significant growth in your overall business?
Sarment is now focusing on greater China exclusively. There is a strong demand for everything that represents quality and has a link with European lifestyle among the affluent and expanding urban middle classes.
They want to know, to try, to live and be part of the elegant lifestyle. But you have to adapt the offer, adapt the methods and be attentive to the customers: it is not a copy and paste of the European market.
In China, you really need to educate the market. You cannot expect to arrive in China and sell large amounts of wine just because you exist. Competition is fierce and you really have to prove your business model.
Shanghai is one of two cities in China (alongside Beijing) where you have to make a mark if you are to be successful as a foreign brand in China. People must see what you are offering and you must be successful there.
Shanghai is one of the world’s most competitive towns when it comes to wine retailing, but we had a great opportunity to establish a store in the Réel mall. It is located on one of the most successful streets in China and the timing was perfect.
“ You really need to educate the market. You cannot expect to arrive in China and sell large amounts of wine just because you exist ”
And in your time in China, how have you noticed the wine market changing?
It changes almost daily. The Chinese are curious and avid learners and wine is no exception. The number of people learning about wine increases every day and the quality of that knowledge is changing too. That is where Sarment creates the biggest difference.
We want people to acquire not just the taste for wine but also the taste for wine knowledge. Our model is based on passing the knowledge about grapes, wine, wine producer, to educate our client base. Giving them part of what is natural in a country like France, Italy or Spain. They can then educate their families and friends. And we get a lot of traction with our business model.
Sarment’s Flagship in Shanghai, China
And in terms of styles and the Chinese palette, what are some trends that you have noticed?
It is difficult to talk about trends. Currently the Chinese prefer red to white wines as they don’t know much at all about white wines. White wine and Champagne are also perceived as very much a drink for women. They prefer Bordeaux to Burgundy as Bordeaux has aggressively – and very successfully – been marked in China. But it is all at a very young age.
China is a continent with different climates, cultures and tastes. They have a very fine palate and react more to the structure and tannins of wines than their European counterparts, which they have developed through their habits of drinking tea. I am confident that if you manage to become a trusted source in China, you will be able to find a clientele for a whole range of wines.
What is perhaps most important when it comes to wine is the notion of Face. In China, consumers never want to lose face or look like they don’t know in any kind of situation. To preserve Face is a must. So when they go to a store, and they don’t know about the product that they are purchasing, they need something in the experience that allows them to retain Face.
Which is perhaps one of the reasons that so far, Chinese consumers have been buying only wines from regions or winemakers that they can recognise, specifically the big Chateau’s in Bordeaux, rather than to ask for help. So in the store knowledge acquisition has to happen in a really natural way.
So we have gone on to train our staff for four months, as locally it’s very difficult to find knowledgeable staff. We worked with them full time to develop their tastes and their vocabulary so they are equipped to offer really personalised assistance and advice to consumers.
The idea is that customers do not leave Sarment with just a bottle of wine, they leave also with the story behind the bottle and stories that they can share with those that they drink it with. Which also helps them increase their level of Face, and be more highly recognised as someone that understands wine.
“ Currently the Chinese prefer red to white wines as they don’t know much at all about white wines ”
The retail store was designed by Yann deBelle de Montby, who has created concepts Dunhill and Berluti amongst others. Why was it important to have someone outside the wine industry develop the concept?
In luxury goods boutiques, particularly footwear, I really love the packaging, the way products are displayed, the importance placed on craftsmanship and the way that staff are able to communicate the uniqueness of the product.
And I find these ideas organically lend themselves to the wine industry. That is why we wanted to choose someone who understood – and had designed – such environments, rather than hire a designer that had worked with hotels, restaurant or bars.
Also we use circular design throughout the concept, which is a bid to truly adapt to our local market. Feng Shui in China is critical, there are some things when it comes to design that you just cannot do.
Very straight angles are considered aggressive, there needs to be a good balance between wood and metal, and soil and glass for example, to create a good flow of energy. So we consulted with a Feng Shui master for the location, the design and even our offices.
“ Feng Shui in China is critical, there are some things when it comes to design that you just cannot do ”
Can you tell us some more about why you chose to enter the Chinese market with a local partner…
In general we very much believe in finding good local partners. It enables you move much faster, focus on what you know and avoid unnecessary mistakes. They are plenty of mistakes that will be made, particularly in a country as different as China.
From the culture, the language, the habits and the way of doing business, it was very important to be able to count on (partner) Bruno Wu as a trusted guide but also someone with the right network and connections to make Sarment a true local player.
What advice would you give to luxury entrepreneurs looking to launch their brand/service in China?
Find the right balance between the Western and the Eastern approach and culture. Think in terms of relationships and the power of a brand before thinking about investment and returns.
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