SELLING WINE IN CHINA NOT AS EASY AS SOME EXPORTERS WOULD THINK

It’s been one of those weeks where I have come to see the wisdom in Albert Einstein’s saying, “The more I learn, the more I realize how much I don’t know.” In my case, I’m talking about wine. After nearly 40 years of working in the wine business, that may seem odd, but given the current realities in wine, it’s more true than false.

Last week, I was in Shanghai on several missions: To attend a conference with about 20 of my colleagues from around the world to hear about the future of wine (more on that to kick off 2019), to check out the so-called burgeoning wine scene in at least one major Chinese city, and to attend ProWein China, a wine trade show put on by Messe Dusseldorf, the same company that runs the original and best wine trade show in the world each year in Dusseldorf, Germany.

Let’s begin with the Chinese. Contrary to popular belief, the market for wine is not all that big. In fact, in the face of a total population of 1.4 billion people, only about 40 million Chinese drink wine. Of those, 90 per cent drink less than one glass of wine every two weeks, and few do it at home. Most of that is red wine, and most of it is consumed by men.

The good news is they drink wine for the experience, not the alcohol. At a seminar hosted by a plugged-in Shanghai wine importer/retailer (Ruby Red), we heard that current consumption, depending on who you believe, is anywhere from 0.5 to 1.5 litres per head. That is very different from the 16- to 20-litre mark across Canada. It is a stunning statement given the rush to China to sell wine is often predicated on that billion-plus market. Indeed, it may well be that China will eventually buy wine the way we do, but I wouldn’t bet on it in the next 50 years. What’s more likely is they will drink their own wine, that at this point is mostly forgettable.

The reality is the Chinese love their baijiu — a category of at least a dozen Chinese liquors (one might describe as “white lightning ”) made from grain with an alcohol content of 53 to 55 per cent. The wine market after a decade of hard work by the French and Australians is about US$2.79 billon. The beer market is US$23.5 billion, while the baijiu market is US$72 billion. I rest my case.

What I noted in Shanghai wine shops were a lot of b, c, and d wine brands — brands long since banished from the top shelves of North American retailers, with exception of the big discounters and monopoly stores. It has me wondering why B.C. producers looking for $25 to $30 a bottle and more would expect to sell any wine of substance in China, given the direct competition is Bordeaux and a limited number of super high-end Australia brands that are working the market daily and have done so for years. You might make some inroads with highly surgical strikes at places like Ruby Red, but it would take an extended and costly effort. In any event, the folks at Ruby Red said to me they have never heard from a single Canadian winery since they opened in 2005.

Of all the mysteries of wine, it may be the pricing that is the most challenging for Westerners. At Ruby Red, there are two prices for every wine on the shelf. The first price is the posted value of the wine, a price no one pays in China. The second price is the Ruby Red members price, a price no members pay because they require a deal. The real or sale price of the wine remains one of the many mysteries of the Far East. Clearly, the folks in France (namely Bordeaux) and Australia (with great support from Wine Australia) have made a major commitment to China, and it’s being rewarded in sales. The French (at 39 per cent) and the Australians (20 per cent) lead all exporters to China. I guess you could say it’s expensive homework that one day might pay off should the drinking culture shift in China, although again, in my view, that is a very big if.

For now, the B.C. wine industry might better concentrate its efforts on removing Canadian impediments to cross-country wine shipments, get serious about the U.S., and continue to dabble in the Scandinavian countries that are attracted to our wines. The wealthy Chinese are already in Vancouver most months, so why not make it easy for them to meet, greet and buy in Vancouver.