Wine in the US: ‘Made in China’ is rare

China has moved into many mar­kets in the United States, but there is one where the The world’s sec­ond-largest wine grower is fo­cus­ing on its huge do­mes­tic mar­ket, re­port ‘Made in China’ la­bel is rare: wine. and from New York.

China Daily (Canada) - - IN DEPTH -

China now has more vine­yards than France, Italy, Aus­tralia and the United States. They oc­cupy more than 3,000 square miles, equal to more than 10 per­cent of the world’s to­tal. And in 2014, the world’s sec­ond-largest econ­omy be­came the world’s sec­ond-largest wine grower by area, over­tak­ing France.

While it has poured bil­lions into the US from real es­tate to cre­at­ing and/or ac­quir­ing com­pa­nies and of­fer­ing a va­ri­ety of prod­ucts, China barely pours any wine into the world’s largest wine mar­ket. The “Made in China’’ la­bel is hard to find in the United States.

In 2013, the lat­est year for which data is avail­able, the US drank a to­tal of 339 mil­lion cases of wine, ac­cord­ing to the UK-based In­ter­na­tional Wines and Spir­its Record (IWSR). That was above France’s 296 mil­lion cases, Italy’s 288 mil­lion, Ger­many’s 274 mil­lion, China’s 144 mil­lion and the UK’s 133 mil­lion.

De­spite in­creas­ing ef­forts de­voted to wine ap­pre­ci­a­tion and the cul­ti­va­tion of wine cul­ture in China, the coun­try is still rel­a­tively un­known as a wine pro­ducer glob­ally, ac­cord­ing to ex­perts.

Known as the “Big Three of Chi­nese wine,’’ Changyu Pioneer Wine Co, Great Wall Wine and Dy­nasty Fine Wines Group ac­count for a ma­jor­ity of the coun­try’s winer­ies, with com­bined rev­enues es­ti­mated at $8 bil­lion, ac­cord­ing to a May 2015 ar­ti­cle in the In­ter­na­tional Busi­ness Times (IBT), which noted that about one-half of China’s wine sales are by for­eign pro­duc­ers, “with Chi­nese winer­ies still gen­er­ally oc­cu­py­ing the mid­dle to low end of the mar­ket’’.

Michael Wu, vice-chair­man of the Chengdu-based Chi­nese Wine As­so­ci­a­tions Al­liance (CWAA), said com­pa­nies like Yan­tai Changyu and Great Wall Wine con­trol big per­cent­ages of the lower price wine mar­ket in China.

“[The Big Three] want to go to the US, but they don’t re­ally have the ca­pa­bil­ity now. In other words, they want to go to any mar­ket that would ac­cept them,” Wu wrote in an e-mail to China Daily. “Con­sid­er­ing our pop­u­la­tion of 1.4 bil­lion, I don’t think they have an im­pulse to ex­port to the US now.”

Fa­vor­able rat­ings

Ac­cord­ing to the IBT, in­ter­na­tional wine crit­ics are now giv­ing fa­vor­able rat­ings to high-end wine made in China, and “given the scale of the Chi­nese wine industry and its grow­ing am­bi­tions, res­tau­rants from New York to Lon­don could add Chi­nese bot­tles to their wine lists — even­tu­ally.’’

Wu, who also serves as the gen­eral-sec­re­tary of the Chengdu Wine As­so­ci­a­tion, said there are 11 wine­pro­duc­ing ar­eas in China.

Some of the most well-known re­gions for wine pro­duc­tion in­clude: Bei­jing; Ningxia Hui au­ton­o­mous re­gion; Taiyuan, Shanxi prov­ince; Tonghua, Jilin prov­ince; Yan­tai, Shan­dong prov­ince; Yibin, Sichuan prov­ince; and Zhangji­akou, He­bei prov­ince.

Ningxia is about 500 miles west of Bei­jing and has more than 50 winer­ies. There are about 80,000 acres of vine­yards planted in Ningxia. By 2020, they plan to have more than 160,000.

That’s more than three times the amount in Napa Val­ley in Cal­i­for­nia, wine ex­pert and author Karen MacNeil told CBS News in Au­gust.

“We thought we knew all of the great wine re­gions in the world,” she said. “You know, we know Tus­cany, we know Bordeaux, we know Napa. We thought we knew them. The idea that some­where in the Chi­nese desert might be the next great wine re­gion in the world, it’s as­tound­ing.”

“By 2020 we will build the re­gion into the wine cap­i­tal of the East with more than 100 qual­ity winer­ies,” Li Jian­hua, party head of Ningxia said in an in­ter­view with China Daily. “This will gen­er­ate 100 bil­lion yuan ($15.7 bil­lion) in rev­enue and 100,000 jobs.”

Hao Lin­hai, the of­fi­cial in charge of the Ningxia wine re­gion, told China Daily: “We have never em­pha­sized our wine pro­duc­tion. We ac­tu­ally want the mar­ket to be im­pressed by the qual­ity of our wines. We want a big wine industry-com­posed of smaller-scale winer­ies.

De­bra Meiburg, Hong Kong­based master of wine, said that “Ningxia is the re­gion that’s get­ting a lot of at­ten­tion at the mo­ment, and the gov­ern­ment has thrown in a lot of money to pro­vide a lot of sup­port.”

Meiburg told China Daily that the gov­ern­ment in Ningxia is spon­sor­ing a re­al­ity TV event where nearly 20 in­ter­na­tional wine­mak­ers have been in­vited to help pro­duce wine in the prov­ince.

“That’s a re­ally in­ter­est­ing move to draw global at­ten­tion to their wine re­gion,” she said. “To me it’s quite ex­cit­ing that they’re bring­ing th­ese in­ter­na­tional wine-mak­ing in­flu­ences to the re­gion. That is a shift in think­ing.”

But Meiburg said that wine grow­ers in Ningxia face prob­lems, es­pe­cially the ex­tremes of win­ter tem­per­a­tures that cause grow­ers to pro­tect vines from the cold.

“The re­gion pro­vides the drier air that is needed to pro­duce high­qual­ity grapes, but the only way to re­ally do that is to lit­er­ally bury the vines each win­ter, so that means they have to push the trunk down and pile dirt on top of them,’’ she ex­plained. “Bury­ing the vines in the win­ter is very hard on the vines. It will never al­low the vine trunk to grow firm and sta­ble in its old age. It lim­its the life of the vine, and older vines al­most al­ways pro­duce higher-qual­ity wines. Al­though Ningxia is one of the best ar­eas at the mo­ment, it has its lim­i­ta­tions.”

‘Down the road’

Pierre Ly, an as­so­ciate pro­fes­sor of In­ter­na­tional Po­lit­i­cal Econ­omy at the Univer­sity of Puget Sound, in Ta­coma, Wash­ing­ton, said: “Pro­duc­ers in China are try­ing to make bet­ter wine year af­ter year. Now they look to be more mo­ti­vated by the growth of the do­mes­tic mar­ket, and ex­ports are fur­ther down the road.

“If you de­cide to mar­ket wine in a cer­tain way, that’s how peo­ple are go­ing to think of it,” he told China Daily. “If you start pro­mot­ing it as a dif­fer­ent thing, some­thing fun (think of Yel­low­tail in the US), there are many ways you can sell wine. A lot of th­ese evo­lu­tions have to do with how com­pa­nies seek mar­ket niches and new ways to make wine avail­able.”

“That’s one of the prob­lems when you sell wine abroad is that you have that im­age prob­lem,” he said. “If you’re not known for wine, peo­ple are not go­ing to be­lieve that you can make good wine.”

Not much ex­port­ing

As for Chi­nese wine be­ing sold in the US, Ly said there’s sim­ply not much ac­cess to speak of.

“There are an only cou­ple places in our area, like The Great Wall Shop­ping Mall in Kent, Wash­ing­ton,” he said. “There they have a bot­tle of Changyu 2003 for $18. That’s all we’ve seen here.”

But right now, wine­mak­ers in China don’t have very se­ri­ous ex­port as­pi­ra­tions, ac­cord­ing to Meiburg. And Wu agrees. “Many of China’s ma­jor wine-pro­duc­ing re­gions have lit­tle rea­son to feel con­fi­dent about the mar­ketabil­ity of their wines in the US, or else­where,” Wu wrote.

“There’s not enough lo­cally made wine in the mar­ket,’’ Meiburg said. “They are plant­ing like crazy, but they don’t feel there’s a huge im­per­a­tive to ex­port. It’s far sim­pler at the mo­ment to sell do­mes­tic wine.”

Ex­cept for a few brands op­er­at­ing on a small scale, she said that there’s not much wine com­ing out of China.

“Grace Vine­yards is cer­tainly ex­port­ing and Dy­nasty Wines, but not many la­bels are com­ing out yet, so you won’t see much Chi­nese wine on the mar­ket,” Meiburg said. And she said that it will be a while be­fore Chi­nese wine­mak­ers have a “se­ri­ous im­pact” on the global mar­ket.

China’s his­tory with grape wine dates back more than 4,600 years, but the mod­ern wine industry has its roots in the lat­ter stages of the 19th cen­tury when the Changyu Win­ery in Yan­tai, Shan­dong prov­ince was es­tab­lished, which is among the coun­try’s largest wine pro­duc­ers. In 1910, the Bei­jing Win­ery was started and pro­duced wine used in reli­gious rites by China’s Chris­tians.

The first Chi­nese wine­maker to es­tab­lish it­self with the help of for­eign fund­ing was Great Wall Wine Co in 1979. It used equip­ment im­ported from France, Ger­many and Italy to help set up op­er­a­tions.

A year later, the French firm now known as Remy Coin­treau — which makes Remy Martin cognac and Coin­treau liqueur — in­vested in the Chi­nese city of Tian­jin to de­velop Dy­nasty Wines.

A num­ber of high-pro­file vint­ners from out­side of China have grabbed space to grow their grape va­ri­eties in the coun­try, in­clud­ing French stal­warts Chateau Lafite Rothschild and LVMH Moet Hen­nessy.

Rothschild started its own Chi­nese vine­yard at the be­gin­ning of the decade with 37 acres of land in Penglai, Shan­dong prov­ince. There it grows grapes for caber­net sauvi­gnon, syrah, caber­net franc and mer­lot wine va­ri­eties.

Karl Storch­mann, a pro­fes­sor of eco­nom­ics at New York Univer­sity and the editor of the Jour­nal of Wine Eco­nom­ics, said China is an at­trac­tive mar­ket for wine be­cause of its pop­u­la­tion size and it’s small but rapidly grow­ing per capita wine con­sump­tion.

“Chi­nese wines are un­known in this coun­try,” Storch­mann said. “How­ever, China has a do­mes­tic mar­ket that is vast and sup­ports a huge wine industry. I as­sume that qual­ity will go up rapidly. Con­sumers need to know that the Chi­nese can of­fer very good qual­ity.”

Ly and Cyn­thia How­son, a lec­turer at the Univer­sity of Wash­ing­ton, are mar­ried and writ­ing a book to­gether about Chi­nese wine. They have been to China three times since 2013, each time for a num­ber of weeks while re­search­ing the growth of the Chi­nese wine industry.

How­son said there are a lot of wine­mak­ers and peo­ple in the wine industry that are talk­ing about mar­kets over­seas.

“Ex­port­ing has some ad­van­tages (bring­ing le­git­i­macy to Chi­nese wine over­all), but for most com­pa­nies there’s such mas­sive growth in China to be­gin with,” How­son said. “The task of ex­port­ing is in­cred­i­bly chal­leng­ing le­gally and prac­ti­cally speak­ing, and ex­port­ing to the US is al­most like 50 dif­fer­ent coun­tries with a whole new set of chal­lenges.”

How­son said for Chi­nese wine to be more vis­i­ble in the US there would have to be more de­vel­op­ment of the industry on the home front.

“More ex­port­ing over­all lit­tle-bylit­tle would in­clude the US,” she said, “once the industry is more de­vel­oped and the strong play­ers have been iden­ti­fied.”

De­spite the gap be­tween China’s im­ports of for­eign wine and its ex­port of do­mes­ti­cally pro­duced va­ri­eties, Storch­mann said he expects im­port growth to pe­ter out in the com­ing years.

“We al­ready see some sat­u­ra­tion,” he wrote. “Do­mes­tic pro­duc­tion will fill this void. Even fur­ther, I ex­pect China to be a net ex­porter in less than 15 years.”

Meiburg said it would be great to see more high-qual­ity Chi­nese wines in the US mar­ket.

“That would be very ex­cit­ing and add to the di­ver­sity of the wine world, but the US mar­ket is not the eas­i­est,” she said. “A few com­pa­nies dom­i­nate much of the im­port mar­ket, and from state to state the laws dif­fer. So it is some­what more prob­lem­atic than it would seem to en­ter the US.

“My ad­vice would be to pick a state, or even a city, and hope to en­ter the city, not the full coun­try,” she added. “In some ways, that’s the same ad­vice I would give some­one en­ter­ing the China mar­ket.”

Meiburg, who has lived in Hong Kong for 30 years, said she has been tast­ing wine pro­duced in China for al­most 15 years.

“It is ab­so­lutely get­ting bet­ter each year, but it’s still in gen­eral of very or­di­nary qual­ity to be hon­est,” she said. “There are a few shin­ing stars, and we’re start­ing to see some wines that at least would be mid-mar­ket wines else­where in the world.”

Meiburg re­it­er­ated that China’s wine grow­ers do not yet have high as­pi­ra­tions for ex­port­ing their goods. “But you can be sure that any time China makes up its mind to do some­thing well it does, and they clearly have started mak­ing up their minds to pro­duce some high­qual­ity wines,” she said.

Wu, with the CWAA, said many of China’s ma­jor wine-pro­duc­ing re­gions have lit­tle rea­son to feel con­fi­dent about the mar­ketabil­ity of their wines in the US, or else­where. “Nonethe­less, they do want ex­ports,” he wrote.

“So the ques­tion is: What will it take for Chi­nese wine to be pop­u­lar in the US? In my opin­ion, Chi­nese wines have to do some prac­ti­cal jobs with their winer­ies and prod­ucts. The prob­lem is that most of the brands are rel­a­tively weak in terms of their knowl­edge of viti­cul­ture, sales.”

“Chi­nese wine still has their own ter­roir to show, but they need to be pa­tient,” Wu wrote. “Af­ter that they can go to in­ter­na­tional or US mar­kets.”

Con­tact the writer at jack­freifelder@chi­nadai­lyusa.com

PRO­VIDED TO CHINA DAILY

A Uygur eth­nic woman works in a grape gar­den in Gaochang dis­trict, Tur­pan city, Xin­jiang Uygur au­ton­o­mous re­gion on Aug 20.

XIN­HUA

A grape-picker pushes a cart loaded with grapes at a vine­yard in Changli county, He­bei prov­ince, in Oc­to­ber 2014.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.