Voluntary Report - public distribution

**Date:** 2005/8/3

**GAIN Report Number:** TW5025

TW0000

**Taiwan**

**Market Development Reports**

**Wine Market Growth**

**2005**

**Approved by:**

![](media/image1.wmf)Hoa Van Huynh

American Institute in Taiwan

**Prepared by:**

Jeff Miller

**Report Highlights:**

This report provides information on Taiwan's domestic wine market
gathered during a recent visit with a prominent wine and spirits
importer located in the south of the island. Growth in consumption and
consumer sophistication have been significant since the end of Taiwan's
most recent economic downturn and SARS troubles in 2002.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Taipei ATO \[TW2\]

\[TW\]

ATO Taipei visited Jack Wu, Managing Director of B.T. Wine and Cigar at
the company's main office in Tainan. The visit was to discuss current
conditions in the Taiwan market for grape wine, with particular emphasis
on opportunities and challenges in the regional market of "southern
Taiwan". Based on the definition provided by Mr. Wu, "southern Taiwan"
is defined as the area of southwestern Taiwan to the south of, and
including Chiayi City.

B.T. Wine and Cigar is an importer and distributor of wine located in
Tainan City. While B.T. imports a fair percentage of their stock on
their own account, the company acts as a distributor for much of the
mid-range wines they carry and offer to retail venues (hypermarkets,
hotel/restaurants, etc.) throughout southwestern Taiwan.

The market for grape wine in Taiwan is experiencing unprecedented
growth, finally breaking through the relatively depressed market
situation that resulted from the first boom in imports following market
liberalization measures that were implemented in the mid-1990s. The glut
of imports and lack of market knowledge regarding grape wine saw sales
shrivel, prices and profits plummet, and stocks sour due to poor storage
practices. Initial signs of market growth during 2000-2002 were
suppressed because of a generally lackluster economy and the 2002
outbreak of Severe Acute Respiratory Syndrome (SARS).

The grape wine consumer today is significantly more knowledgeable
regarding wine than just five years ago. Educational efforts, driven
mostly by French and U.S. wine promotion agencies and amplified by a
rising number of professional and novice wine consultants, have paid off
by both growing market demand and increasing sales of wine in the top
price categories.

With an already established foothold of wine "lovers" (connoisseurs,
aficionados, ...) in Taiwan, the island was ready in 2002 to return to
enjoying wine with gusto. The core factors driving general red wine
purchases in 1999 might best be described as largely unrelated to taste
and quality. Wine at that time was purchased in significant quantities
as a substitute for higher proof spirits (a healthier alternative,
albeit drunk by the case); a healthy drink (marketing focused on wine's
antioxidant and nutritive properties); and as an ingredient in curative
drinks (Mr. Wu notes his experience with cases of cheap wine being sold
as a base in which to steep raw onions -- a reported sure-cure mixture
to help shed unwanted pounds). While the broad market might have been
unfamiliar with wine as a complex, standalone drink, the 1990s saw a
relatively small but important segment of consumers begin to take an
interest in wine as a complex beverage of leisure, culture, and
sophistication. It was this group of consumers who continued drinking
wine through the lean years of the late 1990s / early 2000s and who
built up sufficient knowledge regarding wine to both educate general
consumers (who were already familiar with grape wine and were ready to
move beyond the really cheap stuff) and to ensure Taiwan importers knew
how and what to purchase from wineries. Some of Taiwan's best wine
importers today (in terms of quality) got their start as higher end
consumers during the last decade. Mr. Jack Wu and Jeff Tseng (Chateau
Harvest) belong in this category.

As grape wine "culture" took root earlier in the north than the south,
Jack Wu notes that in wine sale growth in the south is currently growing
at a pace some 15\~20% faster than the level seen in the north. This
would give the south a roughly 50% growth in sales per year (based on
the rate of growth experienced between 2003 and 2004). While French
wines continue to predominate in the south due in fair part to long-term
Sopexa promotion and the Taiwan market's predilection (shared with Japan
and other key Asian markets) toward traditional French wines, Mr. Wu, at
the head of a company that claims to distribute roughly 85% of the
imported grape wine sold in southern Taiwan, expressed interest in
serving as a conduit for competitive U.S. wineries with an interest in
expanding sales into Taiwan. He expressed interest in particular in
learning more regarding wines from the Pacific Northwest.

![](media/image2.wmf){width="6.496527777777778in"
height="3.395138888888889in"}

![](media/image3.wmf){width="6.502083333333333in"
height="4.565972222222222in"}