During a recent visit to CostCo, I stumbled upon a bottle of Yao Ming Napa Crest Blend ($85). I was intrigued that the NBA star has joined the mounting list of celebrities in the wine business. When I got home, I was curious to learn more about the positioning and strategy of Yao's wine venture.
Founded in 2011, Yao Ming Family Wines produces three wines, with the Napa Crest Blend I encountered as the entry level product. The Napa Valley Cab (1500RMB / $238) and the Reserve (6000 RMB / $~950) round out the portfolio.
From the onset, the company was well positioned to capitalize upon Yao's celebrity status in his home Chinese market. During the first few years, all sales came from China (distributed via Pernod Ricard China subsidiary). The ultra-premium price points puts the products out of the price range of the mass consumer.
As we had learned the class presentations, the anti-corruption crackdown in China has dampened the demand for luxury wines. Yao Ming's wines were similarly impacted, and in response the company has pivoted its strategy to attack U.S. markets, which now comprise 15% of the company's total revenue.
It will be interesting to see how Yao Ming Winery fares in the U.S. in the long-term. Thus far, all three wines have garnered 90+ pt wine critic ratings (with Robert Parker scoring the Reserve at 95pts / 98 pt wine enthusiast). Despite the critic acclaim, given Yao's wines play in an ultra-premium segment catering, I wonder whether his identity as a widely popular celebrity familiar to the masses might actually detract from the demand for the wine by consumers. In addition, despite being based in Napa, I am curious whether the association with the Chinese athlete might lead customers to incorrectly identify the wine as being produced in China, which has a less than perfect reputation in food and safety.
To fuel the expansion in the U.S., the company launched a $3 million Crowdfunder campaign aiming to use proceeds to build a visit center in Napa Valley.
http://blogs.wsj.com/chinarealtime/2015/03/04/yao-ming-turns-to-crowdfunding-for-raise-profile-of-napa-winery/
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