WINE IN CHINA: HISTORY, CUSTOMS, DOMESTIC WINES, FOREIGN HIGH-END WINES AND BOOMING DEMAND

WINE IN CHINA

rightAlthough the Chinese have been making wine for thousands of years, most Westerners don't find Chinese wine to be very appealing. This is partly because the Chinese go for quantity not quality and they often raise nutrient-robbing peanuts in their vineyards. The Chinese also add herbs to their wines and increase oxidation, something Westerner vintners try to prevent. Wine is sometimes simply called “red liquor” to distinguish it from “white” grain alcohols.

Chinese wines has gotten a little better, in part because of 2003 government regulations that ban thickeners, saccharin, cyclamates, artificial colors and other additives. There are still no rules in China that wine has to be made from grapes. On store shelves you can see find wine made from apple-juice concentrate mixed with grain alcohol. You can also find bottles labeled "Claret" that contain cooking wine or flavored sugar water mixed with alcohol. Many wines labeled as Chinese are blended with foreign wines---most bulk Chilean wine---and contain only a small amount of Chinese wine.

Grapes can be grown in many places in China but some of these places are so cold in the winter that the vines have to be buried to keep them warm. About 40 percent of China’s wine production is in Shandong province between Bohair Bay and the Yellow Sea. Xinjiang and Hebei Provinces are being developed into wine producing areas. Xinjiang has long been famous for its table grapes. Among the greatest challenges to producing wine in China are the wet summer season and lack of experience of Chinese grape growers, most of whom have never tasted good wine. Australian wine maker Ken Murchison told the Times of London, “I have to train them that quality is more important than quantity.

AFP reported: “China's relationship with wine stretches back thousands of years, but the country is better known for its wines made from rice, sorghum and mead. As interest in foreign wines grows in tandem with economic prosperity, China's grape wine production is on the rise. "We know China can make good wine," said Beijing-based wine blogger Jim Boyce, noting that a century ago Zhang Bishi of Changyu Pioneer Wine Company in Shandong won international accolades, and again twenty-five years ago fellow Shandong winery Huadong won medals abroad. "The difference today is that we see good wine being made throughout the country. The big issue for consumers is actually being able to find good local wines at good prices." [Source: AFP, June 1, 2014 ]

Many vineyards in China are small and remnants of Western wineries that date back to pre-Communist times. The number of Chinese winemakers has increased from a few dozen in the Mao era to around 300 today. Some produce wines made with Cow's Nipple or Dragon's Eye grapes, regarded by many Westerners as too sweet for wine.

Good Websites and Sources: Exhaustive info on Alcohol in China sytu.edu.cn ; Alcohol Use in China oxfordjournals.org ; Warrior Tours warriortours.com ; Chinese drink classification travelchinaguide.com ; Different Alcoholic drinks physics.uq.edu.au ; Wikipedia article on Mao Tai Wikipedia ; Mao tai blog piece /endogenousretrovirus.blogspot.com ; Beer Wikipedia article Wikipedia ; United Nations of Beer on Chinese Beer united-nations-of-beer.com ; Beer Blog tobp.com ; Wine China Wine Info wines-info.com ;Gluckman on wine Gluckman.com ; Chinese Wine shanghaifinance.com

Links in this Website: ALCOHOLIC DRINKS IN CHINA Factsanddetails.com/China ; WINE AND BEER Factsanddetails.com/China ; TEA AND NON-ALCOHOLIC DRINKS IN CHINA Factsanddetails.com/China ; EATING AND DRINKING CUSTOMS IN CHINA Factsanddetails.com/China

Wine Market in China

Wine makers roll their eyes with glee to the growth potential of the Chinese market. Even with the average Chinese drinking only a half a liter of wine, four lifters below the world average, sales of wine in 2002 was about $1.2 billion. Wine consumption is growing at a rate of 12 percent a year. The importation of wine is expected to grow from 2 million cases in 2007 to 50 million cases in 2017. The potential market is estimated at between 50 million and 250 million drinkers.

Reuters reported: "E.U. wine exports to China reached 257.3 million liters, or 67.9 million gallons, in 2012 for a value of nearly $1 billion, more than a tenfold increase since 2006 as rapidly increasing wealth has transformed lives and tastes in the world’s fastest-growing major economy. More than half of the 2012 total, about 139.5 million liters — came from France. The 10 percent surge in 2012 in wine imports over 2011 was led by Spain, which accounted for 36 percent of cheaper bulk wine imports to China in 2012, according to Chinese customs figures. Bulk wine accounted for just under half of all wine imports last year. [Source: Terril Yue Jones, Reuters, June 9, 2013]

China is the world’s fifth-biggest wine market by volume. Wine consumption more than doubled between 2005 and 2010 to about 100 million cases a year, according to Vinexpo, a French wine industry organization. About 960 million liters of wine with domestic labels and 170 million liters of imported wine were sold in 2009. China imported $1.27 billion worth of wine in the first 11 months of 2011, an increase of 88 percent from a year earlier, Xinhua News Agency reported, citing customs data. The U.S. is the largest wine market by volume, followed by Italy, France and Germany. [Source: Bloomberg, March 12, 2012]

China will help accelerate global wine consumption in the next five years. The value of wine purchases may outpace volume in the next four years, helped by high-end consumption in China, Robert Beynat, the chief executive of Vinexpo, told Bloomberg. Chinese, including people in Hong Kong, will increase the amount of wine they drink by 54 percent by 2015 as consumption reaches 1.9 to 2 liters per person, the Vinexpo study shows.

China Overtakes France as Biggest Consumer of Red Wine

In 2013, China became the world’s biggest market for red wine consumption for the first time, overtaking France and Italy. Scheherazade Daneshkhu wrote in the Financial Times, “Red wine drinkers in China increased their consumption by 2.75 times between 2007-2013 - to 1.865 billion bottles. During the same period the amount drunk in France and Italy fell by, respectively, 18 percent and 5.8 percent. French drinkers consumed 1.8 billion bottles of red wine last year while Italians downed 1.7 billion. [Source: Scheherazade Daneshkhu, Financial Times, January 29, 2014 /^]

“More than 80 percent of red wine consumed in China is produced locally. It has become the world’s fifth-largest producer, behind Italy, France, the US and Spain, according to the International Wine and Spirits Research, the London-based drinks research group.“Chinese consumers have become increasingly attracted to red wine since 2005,” according to the study produced for Vinexpo, the Bordeaux-based wine conference which holds its annual Hong Kong exhibition in May. “It attributed the increased popularity to a belief that red wine is healthier than traditional rice-based spirits and a growing tendency to choose red wine for business meetings. /^\

Chinese interest in red wine has also been reflected in recent years in purchases of Bordeaux vineyards and chateaux. Bordeaux dominates China’s red wine imports. Imported wines have risen rapidly - by more than seven times between 2007-2013 - pushing up their share of the domestic market to 18.6 percent, the IWSR study said. /^\

Despite the increased popularity of red wine, total wine consumption in China fell last year by 2.2 percent after a decade of annual growth rates of 20-25 percent, reflecting in part the Chinese government’s anti-corruption drive which has also hit expensive cognac sales. The US remains the world’s bigger consumer of all types of wine, a position it has held since 2011. /^\

In April 2005, AFP reported: “In China, where experts say consumption has risen by around 10 percent annually since the 1980s, wine-drinking has caught on among a restive urban youth population constantly in search of new trends. To draw the attention of local youngsters, China Drinks, the nation's only official magazine devoted to alcoholic drinks, sets up colourful promotion booths in amusement parks in Beijing and Shanghai offering patrons sips of their latest wine collection. "This concept has made many young people interested in wine, especially those looking for new forms of activities to spend their leisure time," one of its writers, Ellen Zhou, says. And despite French wines still dominating the Asian wine scene, "new world" wines from Australia, New Zealand, Chile and South Africa have piqued public interest. [Source: Agence France Presse, April 13, 2005]

Wine Drinking Customs in China

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Chinese like to mix Coca-Cola with white wine and Sprite with red wine. There have been reports of Chinese mixing Sprite with a $170-a bottle Chateau Lafite-Rothschild. One popular saying goes, “Red wine and sprite---the more you drink the sweeter you’ll be.”

One Chinese man who mixes red wine and Sprite in equal measures in a glass told the New York Times, "Wine tastes too bitter, but the more we drink mixed wine, the more we like it." Some Chinese also add things like watermelon slices, lemonade, lemon slices, onion, cucumbers and dried Chinese wolfberries. Wolfberries are bright orange in color and have a bitter taste. They are added for medicinal reasons.

Wines are often downed in shots with the objective of getting drunk rather than sipped for taste. Wines are consumed on night outs at karaoke bars and at wedding parties. Many Chinese down glasses of wine with one swig while they are making toasts, shoutoing “ganbei" before they do. Sometimes they drink fine quality wines in this fashion.

Some Chinese say they drink wine to help them sleep, ward off SARS and take the edge off more potent forms of alcohol like baijui. Elaborately-wrapped boxes with a bottle of wine, corkscrew and wine glasses, are popular gift items. The boxes are often rewrapped and given several times. Bottles of imported wine are often meant to be displayed and shown off rather than consumed.

Figuring Out Which Wine Goes Best with Which Chinese Food

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Figuring out which wine goes best with which Chinese food is now starting to be determined. "It's complicated," chef Leung Fai Hung, an award-winning master chef at Hong Kong’s InterContinental Grand Stanford told AFP. "Cantonese food focuses on sour, sweet, bitter, hot and salty. We have many different marinades and sauces. We also have different types of cooking - steaming, double-boiling, braised, stir fry, baking. The textures are complex." When he recently visited Bordeaux, the three-decade veteran chef said he marvelled at how the French seemed to know exactly which wine to serve with every dish. "I wish I could do it as easily," he said. [Source: Suzanne Mustacich, AFP, November 21, 2011]

But while Western cuisines have had decades, centuries even, to establish pairings that now go unquestioned, Leung, Yu and their peers are tasked with writing the rules overnight. Slowly, however, a blueprint is emerging. Champagne's acidity and bubbles pair perfectly with dim sum, Burgundy's delicate tannins and complex nose are a sublime match for crispy chicken and lotus root chips, and the silky but structured tannins of a less-extracted, aged Bordeaux enhance the texture of braised pork belly.

"You don't feel the fatty texture of the meat," explained Leung. Deep fried and baked dishes with intense flavours go well with "richly textured wine like a younger Bordeaux." "These pairings bring out a richer, more persistent flavour in both the wine and food," he said.

"The really critical thing is the Chinese dining culture," said Yu, pointing at the Lazy Susan, the rotating tray in the centre of the table that is ubiquitous in Chinese restaurants. "In Western culture, the food arrives course by course. In Chinese culture, we put it all in the middle and the dishes arrive at random. Everyone serves themselves in any order. "This is not a good way to pair with wine, so we must use a different strategy." "We focus on one dish - the client's favorite, and choose a wine to go with it," he said, adding with a shrug: "And try not to go too wrong with the other dishes."

John Chan, sommelier and assistant manager at Hong Kong's Spoon by Alain Ducasse, offered this advice: "Freshness is something we prize. For example, we steam our food because we want to keep the freshness. One thing we need to avoid with Cantonese food is oakiness, because the sensation will kill a lot of freshness. Cut back the oak? With producers eager to help fill the wine lists of China and Hong Kong, the emerging wine palate of foodie Asia could just influence winemaking itself.”

History of Wine in China

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Vessels with the
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The earliest evidence of wine making comes from China: traces of a fermented drink made with rice, honey, and either grapes or hawthorne fruit found at the Jiahu archeological site and dated to 7000 B.C. The previous earliest evidence of wine making comes from artifacts dated to 5400 B.C. from Firuz Tepe in Iran.

Analysis by University of Pennsylvania’s Museum of Archeology and Anthropology of the pores of 9000-year-old pottery shards jars unearthed in Jiahu turned up traces of beeswax, a biomarker for honey; tartaric acid, a biomaker for grapes, wine and Chinese hawthorne fruit; and other traces that “strongly suggested” rice.

Grapes were not introduced to China from Central Asia until many millennia after 7000 B.C., so it is reasoned the tartaric acid likely comes from hawthorne fruit which is ideal for making wine because it has a high sugar content and can harbor the yeast for fermentation. Wine traces has also been found in a pottery sample from a Chinese tomb dated to 5000 B.C.

Grape wine was probably produced at least as far back as the Tang dynasty. It never became popular. The first winery was started in Yantai in 1892 by a former Chinese diplomat who hired the Austrian consul as his chief winemaker. The result was Changyu, now China’s largest winemaker. After the Communist victory in 1949, wineries were nationalized and juice, sugar and other additives were allowed to be mixed in. Not surprisingly few people drank the stuff.

Some of the first wine dinners were held at restaurants without corkscrews and wine glasses. The necks of bottles was broken off and the wine was poured into tea cups.

Modern winemaking didn’t begin in China until the 1970s. Some wineries now use Western technology to make dry wines from vinifera grapes, including Cabernet Sauvignon, Chardonnay and Pinot Noir. A few are preparing to export their products to the United States. Winemakers are making progress but are held back by relying on local farmers for grapes whose growing practices are often somewhat dubious. Only a few areas where wine can be produced have been exploited.

Wine Boom in China

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China began experiencing something of a wine boom in the 1990s. While overall wine consumption remained low, accounting for only one percent of the alcohol market, a growth rate of 20 percent a year was maintained for more than a decade. Between 2004 and 2005, the consumption of wine increased 13 percent to about 564 million bottles.

More people are drinking wine as China becomes more affluent and health conscious. Red wine is more popular than white wine partly because red is a color associated with good luck, prosperity and success. Many Chinese like the image of wine drinking. Explaining why she drank wine, one young Chinese woman told the Washington Post, "I like France. I drink French wine. I've heard Paris is very romantic." Others drink it because it for its purported health benefits or because it is a middle class status symbol like cell phones, foreign vacations and designer clothes.

Through the early 2000s, the consumption of European-style wines continued to rise by around 10 to 15 percent as more and more Chinese earned enough money to indulge themselves. The owner of a wine shop in Beijing told AP, “Five, 10, 15 years ago, they wouldn’t have been able to afford it. But now with more disposable income, a sophisticated Chinese public experiments...Before you would see your customer settle for your standard dry red or white. Now you see them leaning for more varietal wines such as merots, Cabernet.”

Both domestic and imported brands of wine are widely available on supermarket shelves. In Beijing, you can find clubs that sponsor blind wine-tasting quizzes and restaurants with VIP rooms where customers can sip high-end wines and are told which wines go best with abalone or hairy crab. At one such restaurant near Tiananmen Square, according to the Washington Post, the cheapest bottle on the menu is $126 Chateu Chmabeau Lussac St. Emillion. The most expensive is a $2,154-a-bottlle 1994 Petrus Pomerol.

Wine’s identification with status has made it a fixture of doing business in China. A representative with a French food wine and food distributor told the Washington Post, “Face is important in China. Wine is part of the show. Lots of people buy wine for status, not only what it brings to a person, but also to the person you give it to.”

Domestic Chinese Wines

More than 80 percent of all wine consumed in China is made domestically, according to Vinexpo. According to the Datamonitor Group, a London-based market analysis firm, China's domestic wine industry generated more than $6 billion in revenue in 2008. Mike Ives wrote in the Los Angeles Times, “It's hard to define the industry's scope because no reliable data exists and some domestic winemakers use imported grapes, write Beijing-based wine experts Fongyee Walker and Edward Ragg, but it's clear that China's vineyards "cannot supply enough wine to meet the nation's thirsty lips." [Source: Mike Ives, Los Angeles Times, January 15, 2012]

Wines produced in China generally fall into two categories: Western-style and Chinese-style. On the latter Mitch Frank wrote in the Wine Spectator: “Both reds and whites are achingly sweet, tending to be high in alcohol"---up to 16 percent---"and resembled vermouth or Sherry with flavors of raisins, toasted nuts, orange peels and hard candy.”

Most wines are red and cheap and meant to be mixed with or chased by other beverages. Until fairly recently it was common to find wine packages taped to a bottle of Sprite or tonic water, The cheapest wines sell for about $1 a bottle in rural shops but that is more than double the price of baijui which has much more of a kick.

Many wine companies import large quantities of cheap wine from Spain or Chile or some other place and put it in their bottles without saying so on the labels. There are no laws in China that prevent wineries from doing this. Until 2004, wineries could even sell “wine” that was half juice.

Domestic Chinese Wine Companies

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As of 2005 there were 400 wineries with wine grapes grown on 100,000 acres. Even so about 10 domestic wine makers dominate 90 percent of wine market in China.

The top wine companies are Yantai Changyu Group, Dynasty, Great Wall, Huanxia Winery, and Tonghua, controlling an estimated two thirds of the market. These and other companies tend to focus on a particular region or particular income group. Tonghua and China Red are strong in the northeast. Dynasty does well in Shanghai. Great Wall is popular with lower income Chinese.

Great Wall produces 90 percent of all wine bottled in China. Most of its wines are blends with just enough Chinese wine to be branded Chinese, with most of the rest coming from Australia and France.

Changyu and Grace Vineyard have produced wines that have scored well in Wine Spectator taste tests. Most of their wineries are in the east within a few hundred miles of Beijing in the coastal areas around the Yellow Sea or the fertile Yellow River Valley. Changryu is in Yantai in coastal Shandong Province. Good quality grapes grow well in areas with humid summers and rocky hillsides buffeted by breezes from the Yellow Sea. Grace Vineyard in Shanxi Province, about a six-hour drive from Beijing, was founded by a Hong Kong Chinese family and is helped by Australian wine maker Ken Murchison. Situated on a plateau above the Yellow River, it produces 1.5 million bottles a year, including some of the most highly-regarded Cabernet Sauvignon and Chardonnay in China. The golden Chardonnay, Tasya’s Reserve, according to Murchison, is the best.

Tianjin Development Holdings, the investment arm of the Tianjin government, is China’s No. 1 wine producer. It makes the top selling Great Wall and Dynasty brands. Dynasty is the third largest wine producer in China. Based in Tianjin, it is a partner of Paris-based Remy Cointreau, which cofounded the company in 1980 with Tianjin Development Holdings. Dynasty sells more than 22 million bottles of wine a year, including 35 brands of Western wines, sold mostly at supermarkets. It Cabernet varieties sell for around 40 yuan. Chardonnay sells for about 20 yuans. Red wines account for 95 percent of Dynasty’s sales. Dynasty does not have its own vineyards. It buys grapes from suppliers.

Suntime Winery is based in remote western Xinjiang Province. It employs a French winemaker and has imported millions of dollars of winemaking technology from Europe. In the early 2000s, Tsingtao entered the wine making

Ninety-nine percent of China's Dynasty Fine Wines Group’s s wines are sold domestically. Lu Wen, production director for company told AFP the domestic market is "big enough" for the company to grow, with wines priced below 40 yuan ($6.40) - compared to the 50 percent duties levied on foreign imports - play a key role in local wine's domination in China. Dynasty's financial controller Rex Yeung said culture also plays a part in the popularity of Chinese wine. "Other than Lafite, many (Chinese customers) just can't pronounce the names (of foreign wines)," he said. [Source: AFP, June 1, 2014 ] business.

Visiting a Chinese Winery in Qingdao

Mike Ives wrote in the Los Angeles Times, As downtown Qingdao faded in our rearview mirror, a misty green hillside came into focus, and the minivan rolled into the driveway of a mansion that looked---improbably---like a French chateau. For the next hour, Zheng walked me around the nearby hills, which were studded with trellises of Chardonnay, Riesling and Cabernet Sauvignon grapes. It might have been May in France, except for the punishing July humidity, and the fact that the hillsides were set against a backdrop of peri-urban sprawl and bisected by a boardwalk whose white stone pillars were engraved with Chinese poetry. [Source: Mike Ives, Los Angeles Times, January 15, 2012]

The Huadong winery---which is the same age as its winemaker---produces 7 million bottles each year and targets Chinese drinkers. "This is a very old society, but more and more Chinese people have been overseas, and our country is opening to foreigners," Zheng said. "[Chinese] people are starting to change their lifestyles, and they're starting to realize the benefit of drinking wine, if you drink it moderately and responsibly." Zheng added that he organizes wine-drinking demos at local universities. Most students can't afford to buy fine wine on a regular basis, he said, but when they grow up and earn big salaries, "They'll think of us."

He led me to a cool, dark fermentation room, where the casks were labeled in French, and into the chateau, where in Victorian-style dining rooms I marveled at glittering chandeliers, sparkling wine glasses and spotless white tablecloths. In an ornate drawing room, bottles of Riesling and Cabernet Sauvignon were sitting on a coffee table near a candy red piano. In spite of my jeans and sandals, I felt like a country gentleman out of a Flaubert novel.

Zheng handed me a glass of the Cab."Smell the aromas," he said. "It's important." "Cherries?" I said. "Dark fruit, earthy, like leather," said Zheng, who studied viticulture in New Zealand. "It's smooth, and that's what our customers like." "It's nice," I said, swishing the Cab around my mouth. My layman's impression was that this $12 bottle of Chinese wine was reasonably good.

Quality Chinese Wines in Ningxia?

According to AFP: “Stretches of land in China's Northern province of Ningxia have been transformed into vineyards which have become internationally recognised. French multinational luxury goods conglomerate LVMH set up a joint venture there in 2012, helping to produce China's first sparkling wine under the prestigious "Chandon" label. 'Improving...some of them' [Source: AFP, June 1, 2014 <^>]

In September 2011, a Bordeaux-style wine from northwestern China's He Lan Qing Xue winery won top honors at an international competition, the Decanter World Wine Awards. With Chinese businesses dominating industries once monopolized by Americans and Europeans, is Chinese wine on track to overtake the West's” [Source: Mike Ives, Los Angeles Times, January 15, 2012]

Mike Ives wrote in the Los Angeles Times, “Hardly, said Walker, founder and co-director of Beijing-based Dragon Phoenix Fine Wine Consulting and one of China's foremost wine experts. I met Walker and Ragg, her husband and business partner, on a torpid July afternoon at their downtown Beijing office. Brochures advertising Chinese vineyards were sprinkled across their conference table, but she said that the quality of most Chinese wines is "depressing."

Walker said China's nascent wine industry is constrained by both physical and bureaucratic climates: Wine-growing areas are either too cold or receive too much rain, and because the Chinese government owns agricultural land, winemakers don't have much incentive to invest in infrastructure.

Fewer than 10 Chinese vineyards produce wine that Walker would consider "really good," and only two stand out: Grace Vineyard, in central China's Shanxi Province, and Silver Heights, in northwest China's Ningxia Hui Autonomous Region. Neither is sold outside the country, she said, but they are available at such fine dining landmarks as the Peninsula Shanghai and the Beijing restaurant Maison Boulud.

Fine wines don't square with my shoestring budget, so in hopes of scoring a free tasting, I took a cab from Walker's office to Pudao Wines, a store in the shadow of Rem Koolhaas' CCTV building. But none were on tap at a pressurized tasting machine, and bottles of Silver Heights were retailing for nearly $65.

Sampling Xinjiang Wines

Mike Ives wrote in the Los Angeles Times, “A four-hour flight brought me to Urumqi, capital of northwest China's Xinjiang Uygur Autonomous Region, which Walker and Ragg say is more climatically "promising" for wine-grape growing than other parts of the country.Despite emails and phone calls, I couldn't arrange tours at any Xinjiang vineyard, so at a downtown Urumqi bodega I purchased three nondescript bottles of Xinjiang wine. The labels were mostly in Chinese, and the bill came to less than $10. At the hostel where I was staying, I uncorked the bottles for a festive posse of Chinese and American tourists, and we drank over shouts of ganbei — “bottoms up!" in Chinese---and platters of spicy chicken. [Source: Mike Ives, Los Angeles Times, January 15, 2012]

Xinjiang is famous for its grapes, but these inexpensive wines did not impress; the general consensus was that they were palatable only when chased by beer or baijiu. "They taste like $4 or $5 American wines: cheap, with a bit of an alcoholic burn," said Kalif Mathieu, 24, a Peace Corps volunteer from Illinois based in Gansu Province. "And this one” It's wine, but not---know what I mean?"

I did: The wine in question had a nose of expired grape juice, and its Chinese label listed such ingredients as honey, lemons and roses. Chai Zi Li, a tourist from the eastern city of Nanjing, remarked that it tasted more like a wine cooler. Chai, who owns the Nanjing bar Simple Chai, said the Chinese drinkers he knows typically buy wines from France, Chile, Australia and South Africa. But he added that some Chinese wine is "so-so."

Chinese Wines Struggle to Find a Market Overseas

In 2014, AFP reported: “China's makers of merlot and chardonnay have found success at home, but have struggled to convince drinkers overseas that their wines can compete with offerings from more established wine nations. Booths for Chinese wine producers displaying bottles of red, white and sparkling wines drew curious crowds at last week's Vinexpo Asia Pacific in Hong Kong. But traders at the fair, the largest wine and spirits event of its kind in Asia, say the domestic popularity of the wines does not translate to success in overseas markets. [Source: AFP, June 1, 2014 <^>]

"The appetite for 'made in China' wines outside China is very limited. If you think about wine, China would not be the place that comes to mind," Judy Chan, one of a handful of China-based wineries exhibiting at the three-day trade show, told AFP."We really only sell domestically," said Chan, who works for Grace Vineyard that operates an estate of some 300 hectares of wine production facilities in the northern inland provinces of Shanxi and Ningxia. <^>

Like other exhibitors at the event, Chan believes that a spate of Chinese food safety scandals discourage international buyers from purchasing the country's wines. "We have all these problems with our food," she said. "We don't spend too much effort on the overseas market. Their market is mature, we are at an embryonic stage," said Lu Wen, production director for China's Dynasty Fine Wines Group."There may be demand from the overseas Chinese population, we just can't really reach the masses abroad," he said,

Foreign Wines and Champagne in China

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Mijiu
Foreign imports make up less than 15 percent of the market. A lot of valuable wines are smuggled into the country to avoid paying customs fees and taxes. A number of wine companies operating China have been charged with undervaluing wines on custom documents escape paying the same fees.

The Chinese are fond of expensive brands of wine. They are the largest consumers of Chateau Lafit Rothschild, one of the world’s most expensive wines (1982 Lafite goes for $3,000 a bottle). They buy so much of it the demand drives up the price. How much they buy is a secret. In the late 1990s, Chateau Lafite announced it was developing a winery in Shandong Province to produce the first Chinese “Grand Cru.”

French vintners that used to mock wine drinkers from Texas and Japan are now falling on hard times as wine consumption in Europe is dropping and consequently are going out of their way to be accommodating to the Chinese market despite the gauche habits of Chinese wine drinkers.

In 1995, China began allowing foreign alcohol imports. Wine imports of 8.7 million liters in 1996 were six time that of 1995. During one four month period in 1996 China imported 48 times more wine than it did in the same period the year before. Large amounts of cheap wine, much of it shipped in large 5,500-gallon plastic shipping bags, were legally imported from Spain, France, Italy and other places, Four times the legal amount was smuggled in.

So much wine came in that a huge surplus was created. Importers abandoned shipments equal to 12 million bottles of wine. Much of it left in government warehouses. The oversupply of foreign wine caused prices to drop to such a low level that 20-year-old French wine was selling for $3 or $4 a bottle, cheaper than many local wines. To stem the flow of foreign wines, Chinese authorities have raised duties on wine and even ordered French wine to be pulled off the shelves--on the grounds that some wines produced by a handful of vineyards in southern France added bovine blood, sometimes used as a purifying agent in winemaking--because of a perceived chance it could be linked with mad cow disease. The ban didn't last long but it made people afraid of drinking foreign wine.

As 2004, 70 percent of the “imported” wine sold at restaurants and hotels in China’s largest cities was fake. Exports of champagne to China soared 30 percent to 650,000 bottles in 2007, a ninefold increase from 2002. There are five-century-old wineries in Italy that are producing champagne specifically for the Chinese market.

Foreign Wine Business

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Wine imports surged from $23.3 million in 2002 to $33.4 million in 2003 to $52.8 million in 2004 to $75.1 million in 2005 to around $140 million in 2006. Much of the wine was bulk wine brought in from Chile and Australia and other places in 25,000 liter bags and later mixed with local ingredients and sold under local names such as Dynasty and Great Wall.

Foreign wine makers began making inroads into the Chinese after joined the WTO and tariffs were dropped from 65 percent to 10 percent in 2005. Some European winemakers are hoping that increases in sales in China can more than offset losses at home.

Some of those of who have profited the most from the wine business in China have not come the wine business or even food and beverage business but have come from sales and marketing in other industries. Foremost among these is Donald St. Pierre, who founded A.S.C. Fine Wines in Beijing in 1996 and was once dubbed the Los Angeles Times as the “probably the single best-known businessman working in China.” Nurtured I the automobile business, he began bottling bulk California wine in bottles with a “Chateau St. Pierre” label and sold for them for under six dollars a bottle and scored his first success selling New Year’s presents made up of two bottles of wine with a neck tie (his original idea of selling the two bottles with a pair of panties was nixed by his Chinese advisors as going too far). [Source: The New Yorker]

A.S.C. Fine Wines is now China’s largest wine importer, with sales of $70 million a year, and St. Pierre is regarded as a pioneer in the Chinese wine business. The company grew at rate of 45 percent a year through the the early and mid 2000s and now sells more bottles of Chateau Latour, one of the most sought after Bordeaux wines, than anyone in the world. The biggest crisis the company experienced was the arrest of Donald St. Pierre Jr. in connection with “falsifying prices” to avoid paying customs fees. He was released after a few days in jail.

High-End Wines in China

Wealthy Chinese are increasing purchasing high-end vintages such as Chateau Lafite Rothschild, according to research commissioned by industry exhibitor Vinexpo from International Wine and Spirit Research. Appetite by affluent Chinese for luxury goods has surged as a result of decades of growth in the world’s most populous nation. A case of Lafite-Rothschild 1982 fetched a record HK$1.03 million ($132,770) at a Sotheby’s auction in Hong Kong in October 2011 while another case of the same vintage sold for HK$720,000 at a Christie’s sale in the same city the following month.[Source: Bloomberg, March 12, 2012]

Chinese wine consumers are known for their relatively undeveloped palates. For some businesspeople and government officials, the value of sharing a Lafite lies in how much face it bestows, not how well it pairs with a meal."It's an immature market," wine consultant Frankie Zhao told the Los Angeles Times. "The first thing people care about is the label on the bottle, not the taste of the wine."

Shaun Rein, managing director of China Market Research Group, told The Guardian, the high-end wine market in China was slight before 2005, but a taste for luxury goods, coupled with a government campaign promoting the health benefits of wine over brain-bending local spirits, has helped high-end Bordeaux become the gift of choice for government officials and the preferred lubricant for business meetings.

Shaun Rein, managing director of China Market Research Group, told The Guardian, "I've been in meetings where a “2,000 bottle of wine is drunk as shots or with ice-cubes," he said. "It is not about trying to savour or appreciate---they just buy what is the most expensive. It has to be French, and the more expensive the better." But this changing one Bordeaux wine producer told The Guardian the Chinese “are very demanding, they want to know everything. They are starting to realise the value of wine, not just the price of it."

China and Hong Kong together are the No.1 importer of Bordeaux wines. They imported $430 million of Bordeaux wine in 2010. Some major Bordeaux wine makers said they tripled sales to China and Hong Kong in 2010, when China overtook both Germany and the UK to become Bordeaux's biggest customer, with exports growing by 67 percent .

Demand for High-End Wines in China

Western-style wine is attracting the attention of China's rising middle class. Some Chinese buy red wine from Bordeaux, France, a purchase that wine experts say connotes high social status. David Pierson wrote in Los Angeles Times, “As recently as a decade ago, Chinese largely stuck to fiery grain alcohol. But upwardly mobile Chinese, eager to display their wealth and sophistication, have since developed a taste for imported wine along with other foreign luxuries. Though cheaper domestically produced wine commands three-quarters of the market, Chinese brands such as Great Wall and Dragon Seal lack the quality and prestige to satisfy local connoisseurs. [Source: David Pierson, Los Angeles Times, January 14, 2011]

That has created an opening for foreign producers who are increasingly counting on China for growth. Hong Kong was the third-largest foreign market for California wine in 2010 with $116 million in shipments, according to the San Francisco-based Wine Institute. Mainland China ranked fifth at $45.2 million.

Former NBA hoops star Yao Ming recently announced that he was jumping into the wine business by importing a Napa Valley Cabernet Sauvignon that retails in China for $289 a bottle, including taxes and duties.

But the real clamor in China is for high-end French reds, which enjoy unparalleled cachet. A Chinese buyer spent an astonishing $540,000 in September on a single lot of 300 bottles of Chateau Lafite Rothschild at a Christie's auction in Hong Kong.

China's Nouveau Riche Desire for Premium Wines

Farah Master of Reuters wrote: “Following the explosion in demand for designer bags, Italian suits and fast cars, expensive French and Italian wines are set to be the next must-have accessory for the wealthy Chinese consumer. Wine bars are proliferating rapidly in Shanghai, the country's glitzy financial capital, where young Chinese professionals congregate after work and regularly splurge around 1,000 yuan ($152) on a bottle of wine. "Chinese people are very aspirational and materialistic so once they have bought the best local brand then they start looking for something even better and more expensive," said Ch'ng Poh Tiong, wine columnist and publisher of The Wine Review publication, based in Southeast Asia, Hong Kong and China. [Source: Farah Master, Reuters, January 3, 2011 ><]

“While China has a growing domestic wine market, industry experts say it is more fashionable to drink wine made abroad and predict consumption will double within the next five years. Favorites include wines from French estates Chateau Lafite Rothschild, which starts around $1,000 a bottle, and Chateau Latour. "There are at least two layers of wine appreciation in China. If the person is buying and serving the wine to say thank you very much for someone who has done them a favor, then there is a social going rate which means they will pull out the expensive wine," said Ch'ng. "Then you have the same person drinking with friends and family and there is no more status attached to the bottle of wine." ><

“Chateau Lafite Rothschild has incorporated the Chinese character of the number eight on its vintage 2008 bottles, set to ship in 2011. The winemaker has not only used the auspicious number "eight" but also the color red, considered lucky by Chinese custom, to help boost sales. Chateau Mouton Rothschild has used a design by Chinese artist Xu Lei for its 2008 vintage bottle. ><

Rothschild Begins Building First Lafite Asian Winery in China’s Shandong

In March 2012, Bloomber reported: “Domaines Barons de Rothschild Lafite began construction of a winery with a local partner in China, its first in Asia, as appetite for premium wine increases in the world’s second-largest economy. The 1.73 hectare (4.3 acre) winery in Penglai in eastern China’s Shandong province, one of China’s largest wine-producing areas, will be Rothschild’s third Lafite production base after Argentina and Chile, according to a government statement. The first phase will cost 100 million yuan ($15.8 million), it said. [Source: Bloomberg, March 12, 2012]

Chateau Lafite Rothschild teamed up with CITIC East China (Group) Co. to build the production base which will include a vineyard, winery and related facilities, according to the government statement. It didn’t give a date for completion of the project. “The world’s top luxury brands are all very interested in the Chinese market, Rothschild is no exception,” said Zhang Lu, a Shanghai-based analyst at Capital Securities Corp. (6005) “The winery underscores its confidence in demand for high-end wine in China.”

Wine production in Penglai, a coastal city located in Bohai-Rim in eastern China, has doubled to 140,000 tons in 2011 from 2005 and the number of wine makers increased to 70 from 39 in the same period, according to the statement.

Chinese Buying Up Bordeaux Vineyards

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Chinese businessmen and investors are snapping up struggling chateaux in the Bordeaux winemaking region. Alexandra Topping wrote in The Guardian , “Three properties have been sold this year, three others---including Château Richelieu, former home to the infamous cardinal's favorite mistress---are already in Chinese hands. Land agents report a surge in the number of Chinese investors looking to buy, said Alexander Hall, director of Vineyard Intelligence, a Bordeaux-based consultancy. "The number of sales is small but over the last year agents have seen a huge number of enquiries. The real boom could be in two years' time." [Source: Alexandra Topping, The Guardian, March 23, 2011]

“Yet there is little sign of the often fiercely patriotic French erecting barricades against the invaders. Hit hard by the economic crisis, the region has seen consumption and exports fall---by 23 percent and 25 percent to the US and UK respectively in 2009, a drop which was only partially recovered last year.” Paul-Henry de Bournazel, who family has been making wine here for more than 400 years told The Guardian many families struggled to make ends meet. "Nobody sells for pleasure, but you would struggle to find a chateau that wouldn't sell for the right price. It's sad, but I'd rather see families sell to the Chinese than tear themselves apart trying to keep a property."

Rather than being viewed as conquerors, Chinese wine buyers are seen as saviours of the region. Bernard Farges, president of the Conseil Interprofessionnel du Vin de Bordeaux (CIVB), the body representing its wine growers and buyers, said Chinese investors buying vineyards would boost exports further. "These are businessmen who believe in their investment, who are opening doors to a new market and ploughing money into properties to make great wine," he said.

Xavier de Pontac of the Château Myrat, said Bordeaux told The Guardian his family has never been squeamish about foreign investment. "First it was our regional neighbours, then European---now its our neighbours around the world," he said. "They come for a taste of Bordeaux, and then either leave because it is too hard, or fall in love with what they produce and become Bordelais." Recent Chinese buyers had invested in equipment and buildings and kept on experienced staff, he added. "Perhaps I would prefer if the people I grew up with still owned all the land around here, but new Chinese owners will make our wines known around the world."

Not everyone is supportive of this new breed of Bordelais. Patrick Etineau recently sold Château de la Salle to a Chinese investor amid a storm of acrimony. "I found them very condescending," he told The Guardian. "They have the money and they think we are in penury." He says since the chateau was sold in January the vines have been left largely untended. "I was happy to sell, because I couldn't maintain the property, but now I have the impression that they don't care at all. We used to make beautiful wine, but this year I fear it will only be fit for the pigs."

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Chateau Changyu in China

Fakes Wines in China

Terril Yue Jones, wrote in Reuters, “Bruno Paumard, the cellar master at a vineyard in China, cannot stop laughing while describing a bottle of supposedly French wine a friend gave him two years ago. It was white wine with a label proclaiming it was from the vineyards of Romanée-Conti; the bottle bore the logo that is on bottles of Château Lafite-Rothschild, declaring its origin as Montpellier in southern France. Domaine de la Romanée-Conti, better known for highly prized and highly priced vintages from the Burgundy region of France, makes only a tiny amount of white wine, labeled Montrachet. It has nothing to do with the equally prestigious Lafite, which is from the Bordeaux region, and neither brand is produced anywhere near Montpellier. “It’s the most magnificent example of a hijacked brand of wine I’ve ever seen,” said Mr. Paumard, who works with Chateau Hansen in the Chinese desert region of Inner Mongolia. “It doesn’t get better than that.” [Source: Terril Yue Jones, Reuters, June 9, 2013 ***]

“Liquor stores, restaurants and supermarkets in China, the world’s most populous nation and one of the biggest wine consumers, wage a constant battle against fake wines. The number of knockoffs on the market may increase as Beijing investigates wine imports from the European Union, threatening anti-dumping tariffs or import curbs. “More expensive wine is O.K. I just don’t want any fakes,” said Helen Nie, a Beijing housewife sharing a bottle of the Italian house white wine at a restaurant with a friend. “If the cost goes up, I’d still buy wine, though some people wouldn’t — the price makes a difference. But the quality is important; it’s a health question.” ***

“Nobody knows how much of the market is cornered by fakes and copycats, said Jim Boyce, who follows the Chinese wine industry on his blog, Grape Wall of China. “Things that are faked tend to be things that are very popular,” Mr. Boyce said. And wine, especially expensive wine, is popular in China, sometimes more for bragging rights than taste.“Those expensive wines are where you see more fakes,” said Maggie Wang, who was sharing the house wine from Sardinia at the Beijing restaurant with Ms. Nie. “But there’s lots of phony wine. Everything’s faked in China,” she said. “For a lot of Chinese consumers, the more expensive it is, the more they’ll buy it. Chinese like things like that — they’ll buy the most expensive house, drive the most expensive car. They don’t want the best, they want the most expensive.” Given the high margins and the demand, the counterfeiters tend to focus on European fine wines. ***

“The first step for anyone counterfeiting wine is to find or manufacture a bottle that is close to the original. “People will also use real bottles with something else inside or make labels that are spelled differently,” said Cheng Qianrui, the wine editor for the Chinese lifestyle Web site Daily Vitamin. “If you know wines, you can tell, but not a lot of Chinese do.” ***

Counterfeit High- End Wines in China

David Pierson wrote in Los Angeles Times, “The lamb chops were cooked to perfection. Fine wines flowed. Then came the piece de resistance: a 1997 Chateau Petrus Pomerol that can fetch about $2,000 a bottle.Wine consultant Frankie Zhao was dining with a group of well-to-do Chinese businessmen at an exclusive private club in the capital. Their host was eager to share---and show off---the prized French Merlot. But after the first sip, veteran taster Zhao knew the collector had been duped. "I could tell immediately it was a fake," said Zhao, who kept silent rather than embarrass his unwitting friend. "It was too fresh and soft and didn't have any complexity." [Source: David Pierson, Los Angeles Times, January 14, 2011]

Seizing on exploding demand, China's ever-resourceful knock-off artists have uncorked a lucrative new business: phony high-end wines. Bootleggers are dousing the market with fakes, refilling empty bottles from famous chateaux with inferior vintages. The problem is so widespread that auction house Christie's concludes its tasting events in Hong Kong and China by smashing empties with a hammer, lest the glass containers end up on the black market."We have to protect provenance," said Simon Tam, head of wine in China for Christie's. "Even if you scrape off the label, there are still channels for the bottles to be misused. It's really about being responsible."

High prices for premium wines have proved irresistible for counterfeiters. Knock-off hooch can be found almost anywhere in the world alcohol is sold, but China is fast becoming the market of choice for pirates. "China's where the big-money wine boom has moved," said Benjamin Wallace, author of "The Billionaire's Vinegar," which delves into the underworld of wine forgery.

At a wholesale alcohol market in the northern Beijing suburb of Huilongguan, buyers can easily find sellers of purported Chateau Lafite Rothschild. The real deal can cost $8,000 a bottle, but even fakes aren't cheap. "A good one can cost [$160] because they use an original bottle," said a storekeeper who gave only his surname, Zhou. Indeed, a cottage industry of bottle scavengers has sprung up to serve the trade. One broker solicits online as a "professional bottle recycler," offering up to $320 for an empty Lafite bottle, depending on the vintage.

Copycat producers benefit from the relatively undeveloped palates of many local consumers. For some businesspeople and government officials, the value of sharing a Lafite lies in how much face it bestows, not how well it pairs with a meal. "It's an immature market," said Zhao, the consultant. "The first thing people care about is the label on the bottle, not the taste of the wine."

Counterfeit Chinese Château Lafite

Terril Yue Jones, wrote in Reuters, “The iconic Château Lafite has become the poster child for wine forgery. A bottle of Lafite from 1982, considered one of the greatest vintages of the 20th century, can cost upward of $10,000. That has led to a thriving industry in Lafite knockoffs in China. Aficionados say there are more cases of wine marketed as 1982 Lafite in China than were actually produced by the chateau during that year. [Source: Terril Yue Jones, Reuters, June 9, 2013 ***]

“However, Christophe Salin, president of Domaines Barons de Rothschild, which owns Lafite-Rothschild, says fake Lafite is not the major problem. “I have never seen a bottle of fake ’82 Lafite,” said Mr. Salin, who has been traveling to China for 20 years. “The problem we have is the creative attitude of some Chinese. They sometimes use our name in funny ways,” he said in a telephone interview from Paris. Several wines on the market in China are branded with names close to Château Lafite, including Chatelet Lafite. Chatelet is the name of one of the busiest subway stations in Paris. Lafite “is such a generic brand in China that it has widespread appeal as a name and as a status symbol,” Mr. Boyce said. The mystique extends beyond the wine — in Beijing, there is a La Fite British Exotic Bar and the Beijing Lafitte Chateau Hotel. ***

“Copyright problems tend to involve the better-known brands. The importer Torres Wines includes Château Mouton-Rothschild, another top-ranked Bordeaux, in its portfolio. Sun Yu, sales director, said phony wine brands like Mouton & Sons or Edouard Mouton popped up in the Chinese market: “It happens in secondary or third-tier cities where they don’t have much wine knowledge.” Elite winemakers are trying to fight back, sometimes by smashing bottles after tastings, to prevent them from being refilled with fakes for resale. ***

Counterfeit High- End Wine Production and Marketing in China

David Pierson wrote in Los Angeles Times, “Though Chinese authorities condemn the trade in spurious wine, enforcement has been episodic at best. Investigators reportedly cracked down on widespread illegal production in Changli, a wine-growing region east of Beijing, but only after state television broadcast an expose in late 2010. A reporter found legitimate winemakers producing counterfeits on the side using a concoction of "citric acid, sodium citrate, tanning, flavoring essence, and coloring." The crudely made beverage was being sold with both Chinese and foreign labels, including Lafite, and appeared to be aimed at inexperienced consumers. [Source: David Pierson, Los Angeles Times, January 14, 2011]

The most common form of deception consists of tweaking a label ever so slightly to trick consumers into thinking they're buying a name brand. Makers of these impostors sell in the open at wine exhibitions, renting booths alongside the legitimate competition. Ian Ford, managing partner of wine importer Summergate Fine Wines, snapped photos of some of the most brazen doppelgangers last year at the Chengdu Wine Fair in western China, one of the industry's most important events. There he found a "Benfolds," which sported a label in red cursive almost identical to "Penfolds," the name and logo of one of Australia's oldest wineries.

Then there was the "Barons de Lafite cellar collection" sold by a company named Wenzhou Oldenburg Lafite Export & Import Ltd. in the eastern city of Wenzhou. The label is an almost exact replica of the iconic Lafite Rothschild logo with its five arrows. "We always explain to customers we're not the original Lafite," said a company salesperson who would only give her last name as He. "This is our own brand." Ford said the copycats are just one component in a crowded landscape that makes China's wine industry distinctly chaotic. Thousands of fly-by-night distributors and producers are vying for a foothold in the rapidly expanding market. "There's a little bit of gold rush mentality with imported wine right now," Ford said.

Anti-Counterfeiting Measures on Wine in China

Terril Yue Jones, wrote in Reuters, “Anti-counterfeiting measures by major international spirit brands, which also fall victim to fakes in China, include bottle buyback programs, tamper-proof caps and the covert tagging of bottles. But such measures are less common with wine brands, according to an executive at an international beverage company in China. [Source: Terril Yue Jones, Reuters, June 9, 2013 ***]

Domaines Barons de Rothschild has been putting tamper-proof tags on bottles of Château Lafite and its second label, Les Carruades de Lafite, since the 2009 vintage. But the producer has been protecting its elite bottles since 1996, Mr. Salin, the company president, said, with four other identification techniques that he would not reveal. “If you show me a bottle of Lafite, I can instantly tell you when it was bottled, a lot of things,” he said. “To counterfeit it is not easy.” ***

Image Sources: University of Washington, Wiki Commons

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated July 2015


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