27
Apr
2018

China; a great opportunity for global niche brands that understand the path to success

In addition to observing the luxury market and its consumers in China, when I travel overseas I like to look out for niche and interesting brands with captivating stories. These brands often turn out to be family owned going back a few generations and were started by ethical and principled people who were very focused that were handed onto the next family member for whom the objectives of the business were engraved into their brains from birth.

This type of business obviously has a personality and plenty of character, which makes them interesting, exciting and even romantic for many of us. Their story and the people are an integral part of the brand and the brand runs through the veins of the people. All these characteristics and attributes are what make these types of luxury brands very attractive to the consumer and a marketers dream; but of course, for all these positives there must be some negatives.

The downside of these brands is often related to all the positives because the current owners either cling so tightly to the rules set hundreds of years previously rather than bringing the brand into the current world, or they limit the opportunity for the brand through their own fear of failing to look after it as their long dead relatives might have done, when it is in the custody. This is why many niche brands remain small and why most luxury consumers globally are unaware of them.

Of course not all niche brands remain small, and many families understand that it is possible to retain the core brand values as the business grows and/or the market changes, and this is how some of the biggest brands in the sector have become household names. They have taken a risk during their history and invested in their future rather than constantly focusing on the past. Money has been invested; some may have been lost but most may have resulted in growth.

Moving forward to the current day and China, I see great opportunities for these interesting niche brands because consumers here are looking for them, and given the overall size of the market, the majority of these brands do not need to have hundreds or tens of thousands of Chinese clients, a few thousand my work for many. But to access this market they need to make a commitment, spend some money and very importantly find experienced in country help to minimise their risk.

Returning to my initial comments related to my desire to search out interesting brands when traveling; a month or so ago I was in Brazil and we travelled to the south of the country to what maybe best described as the ‘Napa Valley’ of Brazil. Now I can already hear you saying that you didn’t know that Brazil had a wine industry, but this region looks very much like the Tuscany region of Italy and in fact the migrants who came and settled here were German and Italian. There is some fantastic and very authentic Italian feed here and of course families who knew how to make wine.

Now I like wine and although I am not a connoisseur in any way, I do have good taste in wine and an ability to select a reasonable wine when asked so I am told. I have also been to Napa and a host of other wine producing areas as far afield as Canada, France and Italy, so to do the same in Brazil was entertaining and educational.

The first grower we visited was a family owned vineyard that now had the 5th generation working there continuing the philosophy of the founder to the letter. The presentation about the process, the different soils across their 30 hectares and the changing flavours of their products was extremely well communicated and we bought a couple of bottles to bring back to China because obviously we couldn’t bring much more had we wanted to.

While we were trying the various products we talked about China and the subject of my job came up to which the lady teaching about the product left the room to go and get the head of marketing who was of course a family member. I explained a little more and we exchanged cards, and I was told that this lady had recently been to China and was talking to some partners there about bring their product into the country. I said I would be happy to check these people out for her and give her an opinion.

On my return I received a mail from the lady giving me the details of these partners, both were based in Hong Kong, one was some sort of business development company that had an address but no telephone number in Hong Kong and only a Brazilian mobile number and the other was simply a wine distributor. I appreciate that if you know little or nothing about the premium or luxury market in China then you may choose to take a chance on the first people you meet who say they know more than you, but this is a niche market irrespective of the number of consumers.

I am remain in contact with this brand because it meets all those criteria I mentioned earlier and if I am honest, I don’t want to see them put time effort and money into China without a prior understanding of what it will take to stand a reasonable chance of success. China is a huge market that offers businesses from many sectors great opportunities to expand, having the right attributes as a brand is a must, but so is understanding what is required to succeed before you jump in.


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