BEIJING At a time when recession-pinched Americans are swilling Two Buck Chuck, Sun Xiao thinks nothing of entertaining his friends with $150 bottles of wine at his private club.
"I like wine very rich wine," Sun, chief executive of a real estate investment firm, said one recent evening as attendants young women in traditional Chinese gowns -- stood nearby, ready to serve up an expensive bottle at his beckon. "It's the perfect example of humanity and nature living in harmony."
Sun's appreciation of foreign wine is increasingly shared by others in China's swelling middle class, many of whom are replacing the long-popular baijiu grain liquor and beer at their dinner tables with French Bordeaux and Napa Valley zinfandels. And that has the California wine industry tipsy with anticipation.
"More and more Chinese want to take good care of their health and are shifting from baijiu (pronounced by-joe) to the grape," said Jimmy Ye, an executive in a Shanghai investment fund and a wine convert.
Opening up an expensive bottle say, a $4,000 Chateau Petrus to seal a business deal signals the seriousness of the relationship, said Wu Jianxin, who owns the Beijing private wine club QingPingHuiGuan, which serves only the most revered French wines. "It shows generosity and indicates you are cultured."
But China's new appreciation of foreign wine also reflects "a nouveau riche mentality that the most expensive must be the best" that is prevalent in China's booming economy, he added.
"People ask me, 'What's the most expensive wine you have?'" said Gaylen Richardson, vice president of Via Pacifica Exports, a wine exporter started by David Duckhorn, a member of the prominent Napa Valley wine family who set up a Shanghai store about two years ago that replicates a Northern California tasting room. "I'll say, Quintessa, about 2,500 yuan ($366). They'll say, 'That's not expensive enough.' "
Richardson, a former wine buyer at Market restaurant in St. Helena, is among a growing group of pioneers seeking business in China after wine sales for California wineries last year fell for the first time in 16 years, according to wine industry consultants Gomberg, Fredrikson & Associates in Woodside.
"I get a call from wineries all the time. They are sitting on inventory," said Christopher Beros, managing director of California-China Wine Trading Co., which has offices in San Francisco and Shanghai. He holds regular wine tastings with his nine-person China staff to educate them on the subtleties of vintages and educate himself about the Chinese palette. One reason Chinese connoisseurs have a strong preference for red wine, he has learned, is that they believe the color signifies good luck.
"China is literally the Wild Wild West of the wine world," said Eric Pope, who overseas international wine programs for the San Francisco-based Wine Institute, a trade group representing more than 1,000 California wineries.
Wine consumption in China, promoted in part by a small but growing domestic wine industry, nearly doubled from 2004 to 2008 to about 900 million bottles, making it the eighth-largest wine market in the world, according to Vinexpo, organizer of one of the world's largest wine and spirits conferences. Over the next three years, consumption is expected to soar 32 percent, to 1.26 billion bottles. The United States, the world's second-largest wine market, consumes about three times as much wine as China.
Much of China's wine market is bipolar consumers buy cheap bottles for a few dollars or dole out more than $1,000 a bottle for elite French vintages, Duckhorn said. "Our job is to open up the middle market, $15 to $100 a bottle," he said.
Imported wine in China is slapped with a 50 percent tax, so it's pricier for Chinese to explore California vintages than it is for Americans.
Cost is not the only challenge. California winemakers face tough competition in China, especially from the French, who have been selling wine in China for decades and who aren't above a little vinous trash-talking. They promote their wine as superior to all others, ignoring the historic 1976 "Judgment of Paris" blind tasting in which California chardonnays and cabernet sauvignons triumphed over their French counterparts.
"The French wines always come in first in China," said Yanguang Jin, general manager of AWA Shanghai Trading Co., a 1-year-old company that is importing California wine. In 2008, French wine represented 46 percent of all imported bottled wines, while the United States had only 5 percent of the market, according to the U.S. Department of Agriculture.
The Wine Institute has launched a marketing push in China to educate the newly wealthy masses about California wine, whose fruity intensity is more in line with the Chinese palate, some sellers say.
In addition to competition from France, Italy, Australia, Chile and other winemaking nations, California wineries also face a threat common to many industries in China copycats.
"There are a lot of fakes and the government has one eye open and one eye closed," Wu said. "The fake wine industry will employ a lot of people."
Widespread official corruption in China is another problem.
"A full case arrives on the dock and the inspector says, 'I have to keep one bottle. It's called inspection,'" Wu said. "A cargo comes in and two cases are taken."
It also is common for restaurants and other companies to sign exclusive agreements with one supplier which shuts out newcomers.
The success of California wines in China will depend largely on word-of-mouth branding and guanxi gaining favor through networking and relationship-building. A bit of unorthodox salesmanship might help as well.
Exporter Richardson, a big man, sometimes slings a wine bag around his body and charges through the streets of Shanghai: When he spots a restaurant, he walks in and asks if the managers would like a taste. On other days, he organizes wine tastings at Via Pacifica's wood-paneled outlet that includes comfortable living-room furniture arranged around a fireplace. Wine racks along the wall hold such star wines as the Goldeneye Pinot Noir, served at President Barack Obama's Inaugural Luncheon.
"This is a very immature market. They don't know much about wine," Richardson said one recent morning as he hoisted two cases of wine into a taxi to personally deliver them to two restaurants. "But the drive to know about wine is there."
Napa and Sonoma counties may be unfamiliar to many in this nation of 1.3 billion people, but California and the American spirit are well known.
"When I taste the red wine of America, I can feel the American culture," said Sun, the successful Beijing executive who is discovering California wine. "The wine produced by the Americans is more connected to the age the times than the French wine."
Copyright (c) 2010, San Jose Mercury News, Calif.
"I like wine very rich wine," Sun, chief executive of a real estate investment firm, said one recent evening as attendants young women in traditional Chinese gowns -- stood nearby, ready to serve up an expensive bottle at his beckon. "It's the perfect example of humanity and nature living in harmony."
Sun's appreciation of foreign wine is increasingly shared by others in China's swelling middle class, many of whom are replacing the long-popular baijiu grain liquor and beer at their dinner tables with French Bordeaux and Napa Valley zinfandels. And that has the California wine industry tipsy with anticipation.
"More and more Chinese want to take good care of their health and are shifting from baijiu (pronounced by-joe) to the grape," said Jimmy Ye, an executive in a Shanghai investment fund and a wine convert.
Opening up an expensive bottle say, a $4,000 Chateau Petrus to seal a business deal signals the seriousness of the relationship, said Wu Jianxin, who owns the Beijing private wine club QingPingHuiGuan, which serves only the most revered French wines. "It shows generosity and indicates you are cultured."
But China's new appreciation of foreign wine also reflects "a nouveau riche mentality that the most expensive must be the best" that is prevalent in China's booming economy, he added.
"People ask me, 'What's the most expensive wine you have?'" said Gaylen Richardson, vice president of Via Pacifica Exports, a wine exporter started by David Duckhorn, a member of the prominent Napa Valley wine family who set up a Shanghai store about two years ago that replicates a Northern California tasting room. "I'll say, Quintessa, about 2,500 yuan ($366). They'll say, 'That's not expensive enough.' "
Richardson, a former wine buyer at Market restaurant in St. Helena, is among a growing group of pioneers seeking business in China after wine sales for California wineries last year fell for the first time in 16 years, according to wine industry consultants Gomberg, Fredrikson & Associates in Woodside.
"I get a call from wineries all the time. They are sitting on inventory," said Christopher Beros, managing director of California-China Wine Trading Co., which has offices in San Francisco and Shanghai. He holds regular wine tastings with his nine-person China staff to educate them on the subtleties of vintages and educate himself about the Chinese palette. One reason Chinese connoisseurs have a strong preference for red wine, he has learned, is that they believe the color signifies good luck.
"China is literally the Wild Wild West of the wine world," said Eric Pope, who overseas international wine programs for the San Francisco-based Wine Institute, a trade group representing more than 1,000 California wineries.
Wine consumption in China, promoted in part by a small but growing domestic wine industry, nearly doubled from 2004 to 2008 to about 900 million bottles, making it the eighth-largest wine market in the world, according to Vinexpo, organizer of one of the world's largest wine and spirits conferences. Over the next three years, consumption is expected to soar 32 percent, to 1.26 billion bottles. The United States, the world's second-largest wine market, consumes about three times as much wine as China.
Much of China's wine market is bipolar consumers buy cheap bottles for a few dollars or dole out more than $1,000 a bottle for elite French vintages, Duckhorn said. "Our job is to open up the middle market, $15 to $100 a bottle," he said.
Imported wine in China is slapped with a 50 percent tax, so it's pricier for Chinese to explore California vintages than it is for Americans.
Cost is not the only challenge. California winemakers face tough competition in China, especially from the French, who have been selling wine in China for decades and who aren't above a little vinous trash-talking. They promote their wine as superior to all others, ignoring the historic 1976 "Judgment of Paris" blind tasting in which California chardonnays and cabernet sauvignons triumphed over their French counterparts.
"The French wines always come in first in China," said Yanguang Jin, general manager of AWA Shanghai Trading Co., a 1-year-old company that is importing California wine. In 2008, French wine represented 46 percent of all imported bottled wines, while the United States had only 5 percent of the market, according to the U.S. Department of Agriculture.
The Wine Institute has launched a marketing push in China to educate the newly wealthy masses about California wine, whose fruity intensity is more in line with the Chinese palate, some sellers say.
In addition to competition from France, Italy, Australia, Chile and other winemaking nations, California wineries also face a threat common to many industries in China copycats.
"There are a lot of fakes and the government has one eye open and one eye closed," Wu said. "The fake wine industry will employ a lot of people."
Widespread official corruption in China is another problem.
"A full case arrives on the dock and the inspector says, 'I have to keep one bottle. It's called inspection,'" Wu said. "A cargo comes in and two cases are taken."
It also is common for restaurants and other companies to sign exclusive agreements with one supplier which shuts out newcomers.
The success of California wines in China will depend largely on word-of-mouth branding and guanxi gaining favor through networking and relationship-building. A bit of unorthodox salesmanship might help as well.
Exporter Richardson, a big man, sometimes slings a wine bag around his body and charges through the streets of Shanghai: When he spots a restaurant, he walks in and asks if the managers would like a taste. On other days, he organizes wine tastings at Via Pacifica's wood-paneled outlet that includes comfortable living-room furniture arranged around a fireplace. Wine racks along the wall hold such star wines as the Goldeneye Pinot Noir, served at President Barack Obama's Inaugural Luncheon.
"This is a very immature market. They don't know much about wine," Richardson said one recent morning as he hoisted two cases of wine into a taxi to personally deliver them to two restaurants. "But the drive to know about wine is there."
Napa and Sonoma counties may be unfamiliar to many in this nation of 1.3 billion people, but California and the American spirit are well known.
"When I taste the red wine of America, I can feel the American culture," said Sun, the successful Beijing executive who is discovering California wine. "The wine produced by the Americans is more connected to the age the times than the French wine."
Copyright (c) 2010, San Jose Mercury News, Calif.
