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This article is translated from the Chinese-language original of
Commentary on China's Wine Industry, Volume 1.
Business has never been production itself. It is an act of exchange. Production solves the question of “making something,” while business solves the question of “why people are willing to buy it.” What lies between the two is not simply channels or advertising, but perceived value.
When consumers are willing to pay a price higher than cost, a premium is created. When consumers are only willing to pay for cost, the premium disappears. An exchange without a premium is merely cost recovery. An exchange with a premium is the true sign that business has taken shape.
But a premium is not something a company can simply declare. It is a subjective feeling of value confirmed by consumers. The same product may carry completely different meanings in the eyes of different people. Some pay for function, some pay for efficiency, some pay for brand trust, and others pay for status and symbolic identity.
The formation of a premium is never decided solely by the production side. It is confirmed by the consumption side. A company can determine its cost structure, but it cannot directly determine whether consumers believe something is “worth it.”
Price therefore becomes a signal. It is not just a number, but an expression of value hierarchy. If price becomes detached from perceived value, it turns into a burden. If price matches value, it becomes recognition. The sign of business maturity is not that prices are high, but that prices are understood. The clearer the price, the clearer the positioning; the clearer the positioning, the more stable the premium.
This logic is particularly evident in the wine industry. Wine is both an agricultural product and a cultural product. It has technical thresholds, but it also carries emotional expression. In theory, its premium comes from terroir, vintage, winemaking techniques, brand history, and consumption scenarios. However, these forms of value must be genuinely perceived by consumers before they can be transformed into price.
If value remains trapped within a professional discourse system and fails to enter consumers’ everyday understanding, then the premium is merely self-expression rather than market consensus.
Many people tend to understand the high price of wine as proof of quality. Yet quality itself does not automatically equal premium. When consumers buy a bottle of wine, they do not calculate the cost of production. Instead, they make an internal judgment: Is this wine suitable for my occasion? Does it match my taste? Does it fit my budget structure?
If these three questions are not answered, even the most refined expression of terroir will struggle to turn into long-term repeat purchase.
Mature markets are stable because their price structures have hierarchy and continuity. Different price bands play different roles. Everyday wines support volume. Mid-range products serve mainstream occasions. High-end products carry image, scarcity, and symbolic expression. Consumers can find a suitable option under different needs, and the premium therefore becomes structural rather than accidental.
The essence of price hierarchy is not to separate what is expensive from what is cheap. It is to distinguish scenarios and roles.
When price structure is missing, premium loses its foundation. If a market lacks a clear everyday price band, consumers cannot form stable habits. If prices generally remain in a range that requires hesitation, purchase frequency will naturally decline. The premise of premium exchange is that consumers can understand and accept the value represented by price.
For Chinese wine, the real question is not whether prices can be raised, but whether value can be perceived. Premium is not a right held by companies. It is a judgment made by consumers. Only when consumers are continuously willing to pay extra for a certain taste experience, a certain occasion fit, or a certain form of brand trust can premium exist in a stable way.
The essence of business has never been simply telling a good story.
It is completing the exchange.
References
Almquist, E., Senior, J., & Bloch, N. (2016, September). The elements of value. Harvard Business Review. https://hbr.org/2016/09/the-elements-of-value
Chan, K., Jubas, J., Kordes, B., & Sueling, M. (2015, March 1). Understanding your options: Proven pricing strategies and how they work. McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/understanding-your-options-proven-pricing-strategies-and-how-they-work
International Organisation of Vine and Wine. (2025). State of the world vine and wine sector in 2024. OIV. https://www.oiv.int/sites/default/files/documents/OIV-State_of_the_World_Vine-and-Wine-Sector-in-2024.pdf
Wine Australia. (2026, February 25). New insights on mainland China’s wine consumers. Wine Australia. https://www.wineaustralia.com/news/market-bulletin/issue-358
Wine Australia. (2026, March 11). Rebooting the Chinese wine market: key trends for Australian wine exporters. Wine Australia. https://www.wineaustralia.com/news/market-bulletin/issue-359
Author's Bibliography
Currently as a doctoral candidate. Shumeng Dong is e works at the Marketing Teaching and Research Office, College of Wine Science, Northwest A&F University. She serves as a consultant for the Wine Culture and Tasting Center of Northwest A&F University, Deputy Secretary-General of the Wine Professional Committee of the Chinese Poetry and Wine Culture Association (a national first-level professional social organization), a lecturer at the Queen Mary Engineering College of Northwestern Polytechnical University, the MBA & EMBA Center of Xi'an Jiaotong University, and a practical lecturer for the CBL program at EM Lyon Business School. She graduated from the Burgundy School of Business in France, majoring in International Trade of Wines and Spirits. She has participated in compiling the 14th Five-Year Plan general higher education undergraduate planning textbook Wine Hygiene, the special project World Wine Classification under the Development and Reform Program of the Ministry of Science and Technology, and other works. She has published multiple papers and presided over a number of teaching reform projects such as "Curriculum Construction of Wine Marketing and Quality Improvement of Talent Training".