1144 Views |  Like

Is China the new El Dorado of wine?

Jean Gabin once infamously said, “The day I drink milk is the day cows eat grapes.” An elegant saying, indeed, showing that wine is not only the drink of choice in France, but an integral part of everyday life.

Could this become a reality as well in China? If we are talking about tea, then yes. Much more than a soothing beverage, tea in China is a veritable social and gastronomic institution, central to the lives of the Chinese, who drink it at work as much as they do at home. Wine, evidently, is quite another story!

A spectacular sensation for wine

Wine is enjoying vibrant success in China at the moment – the quantity of orders for imported wine tripled between 2006 and 2011. Wine consumption also increased by more than 150% in less than 15 years, making China the fifth greatest wine-drinking country in the world, with 1.9 million bottles sold in 2011. In the big Chinese cities, wine bar are popping up everywhere like mushrooms – in Shanghai a new wine bar opens practically every month! What could be more exciting for entrepreneurs?

Such future projections drive Chinese ambitions to their heights. The Middle Empire is poised to become the sixth largest wine producer, the third largest importer, and the second greatest consumer in value in the world by 2016. How could such a exponential growth rate be possible? The answer is simple. The Chinese population is a young one, with half of its citizens under the age of 35. Education in China has become mandatory, and urbanisation is rampant. With 1.3 billion people in total, 40% live in cities, where the greatest consumption can be found. The urban population increases by 13 to 15 million people each year. As the Chinese wine market is currently made up of only 320 million individuals, the potential for consumer growth is sizeable, and increases by more than 10% per year. One can see that the country is fast becoming a gold mine for the wine industry.

Wine, yes, but especially Chinese wine

The progress of the Chinese market currently generates the greatest profit for local wineries, explains Robert Beynat, the general manager of Vinexpo. “Like us the Chinese are patriots – when we don’t recognize a certain product, we prefer to start by purchasing what is being produced in our own country, in our own field of production.” And lest we be mistaken, Chinese wine producers are not interested in becoming the greatest wineries in the world. Their ambition, rather, is to conquer the foreign stake on wine in their own country. And it’s working.

One striking example is that of Xixiaking – the greatest wine production estate in the Ningxia region, with a vineyard of 5,000 hectares, 13 million bottles of wine produced per year, and 60 different vintage labels, it is a veritable wine factory!

Grace Vineyard, 600 kilometers west of Beijing, is another good example of the Chinese approach to wine production. It was started in 1997 by Zhi Qiang Chen, a wealthy Chinese businessman who had made his fortune in corn, who wanted to create wines appealing to the Chinese sensibility. His strategy was to buy grapes from small local producers, to emphasize the cultural idea of the color red (meaning luck, happiness, and love) in his marketing strategy, and even to develop a sort of “French” vino-tourism, even reconstructing a Bordelais chateau on the site of the vineyard.

And what of the quality of wine?

Since its entry into the OMC in 2001, China is now obligated to follow a number of international rules and regulations in the production process, in order to ensure a certain standard of quality and taste. Quality is still the greatest obstacle for the Chinese wine industry to overcome, at all price levels, if it really hopes to overcome the exporting industries. In China, there is still little true understanding of what it takes to create a good wine: while producers are now developing their cultivation process, using pesticides and calculating harvests, both grapes and wines are treated by employees like any other manufactured product in a factory, where the hand of technology reigns supreme. While Chinese producers may dote on the sophistication of the packaging and marketing, they have little idea of the very quality of the product they are selling.

The quality of the land also makes a huge difference to the final product. More than half of Chinese viticulture takes place in the Eastern coastal regions, near the sea of Bohai – a far from ideal ground for cultivation due to its frequent monsoons, which, even in moderation, causes heavy rainfall during the maturation period of the grapes, This is a certainly problematic issue.

A markedly French influence

France, the largest wine exporter to China, makes up to 45% of the total imported wine on the Chinese market. As a consequence, French savoir faire has never been more researched in this field as it is now. For the Chinese hoping to forge their own legacy and approach to viticulture, the solution is apparent: to invade French schools and universities.

Some would call it a travesty, when considering the 33 Bordelais wine estates purchased by the Chinese in the last 5 years. Others, such as the French government, would call it an opportunity for partnership. France has recently signed an agreement of cooperation with the Chinese government and is actively working to develop, for example, a model for viticultural sustainability in the Beijing region. Having invested 1.7 million Euro, it is the largest budget ever summoned for a cooperative agricultural project. France has provided China with installation support, basements, 500 vineyard plants of 16 different varieties, as well as technical expertise.

In conclusion, China currently has everything it takes to become a major wine producer on a global scale, both in terms of quantity and quality. The country has as many resources suited to wine production as did the great wine regions of old Europe. The country’s booming economy, with the increasing wealth of a sizeable part of the population, allows more Chinese access to a standard of living which encourages the consumption of wine.

At the moment, this consumption will be centred on local wines. But we can rest assured that this is a good sign – the more Chinese entrepreneurs start their own vineyards, the more wine they will produce, the more wine they will drink, and the more they will continue to import!

Jean Baptiste Ancelot

Translation by Ritz Wu