Note: This is adapted from an article I wrote for the Chinese edition of La Revue du Vin de France.
By Jim Boyce | It’s easy to be positive about Chinese wine. Track down some award-winning bottles from contests at home and abroad. Drink some quality local labels, ideally on someone else’s account, listed by top restaurants and hotels or leading national distributors. Or, in my case, organize dozens of tastings, write hundreds of posts and talk to thousands of consumers and trade people, with a focus on leading wineries like Silver Heights, Grace Vineyard and Kanaan. All good. But the truth is these wines are the exceptions and only represent a small part of local production.
Given this, the annual La Revue du vin de France tasting of Chinese wines served as a reality check. I joined as an observer at one of the four judging tables and tried over 120 wines. While some wines were good, particularly the sparkling ones, I was surprised at how many faulty or mediocre samples we faced. Some had too little fruit, others too much oak, some tasted dirty.
“It’s not just poor fruit,” said one judge. “It’s also technical faults.” “I expected more from these wines, maybe other tables had better ones,” said another. “Volatile acidity for this one, oxidization for that one,” said yet another.
To be clear, there were good wines. And Chinese wine is improving across the spectrum. But the number of sub-par wines is a concern given how fast the overall wine sector is developing.
Chinese wine particularly faces problems in terms of value for money, including in the less expensive niches it once dominated. Good relatively cheap imported wine has flowed into China for years from major sources like Chile, Spain and South Africa. Now other nations, particularly from eastern Europe, are gaining market share.
While some imports are attractive in part due to China’s free trade agreements with nations such as Chile, Australia and New Zealand, foreign wine also simply tastes better and is easier to get. Ten years ago, many consumers had to rely on local wine shops and supermarkets, where risk-averse or lazy managers stocked mostly local and/or French red wines.
Now these consumers can travel the world via e-commerce. This is particularly crucial in cities beyond Beijing, Shanghai and Shenzhen, the traditional focus of importers. Consumers can buy online through general retailers like tmall or jd.com, niche ones like yesmywine.com or vinehoo.com, distributors such as Torres and ASC, and other sources. Three bottles of French wine delivered to your door for rmb150? Done. An inexpensive Romanian Merlot, Argentine Torrontes or South Africa Pinotage in your hands within hours? Done, done and done.
How can Chinese wines compete? In terms of price, they face Spanish wines that enter China at a mere one or two Euros per bottle. In terms of diversity, the mass planting of Cabernet throughout China has made the local wine industry a “one-trick pony”. It feels like Chinese producers aren’t in touch with the consumer revolution.
A major turning point came over four years ago when President Xi Jinping cut down on luxury goods spending by officials. He forced many importers and producers to either focus on consumers or go out of business. Consumers are a tougher sell: they offer lower sales per purchase and often are demanding in terms of pricing and service. At the same time, they are increasingly informed about wine via travel abroad, tasting at home, and the growing amount of wine info in Chinese. And they are armed with smart phones: they can check prices to avoid getting ripped off, study scores and tasting notes to make sure the wine fits their needs, and talk to friends on WeChat for recommendations.
Yes, there are consumers who still buy simply for gifting or entertainment, who care about the status of a brand or region more than the taste of its wines. But there is a rising niche interested in exploring wine, who use their phones and networks to make informed decisions, who promise a future where quality is more and more important.
Despite this, Chinese wine producers still plant hectare after hectare of Cabernet Sauvignon, even though it is unclear this grape is the best match for the county’s diverse terrain let alone the many newcomers to wine. They continue to focus on Bordeaux-style reds, even as fruity New World-style wines are gaining share, and as consumers, when given the chance, state they also enjoy white wines. And many of the better Chinese wines are priced far higher than the equivalent imports. Perhaps memories of those huge profit margins of five years ago are hard to give up, or they believe the market will eventually absorb their production, but my experience with buyers is that they almost always find Chinese wine too expensive.
Nothing underscores this situation more than the growing market share of imported wine. Only a few years ago, the share of local wine was generally pegged at 80 percent. Now, Chinese wine production is stalling and its share is less than 70 percent. Last year, China imported 625 million liters of bulk and bottled wine, according to China customs, while local production was listed at 1.1 billion liters. That gave imports a 36 percent share.
And some industry insiders think the import share is even higher. They note that national production is compiled from regional and provincial numbers. This is due to sales between regions, with a winery in region A selling some wine to winery B, and both listing it as production. And, these insiders say, local grape vineyard coverage and fermentation capacity also suggests that local production is overstated and, in turn that imports now have half or more of the market.
Add to this the many challenges faced by Chinese wineries. For one thing, wineries in northern China must bury their vines every fall as protection against the winter cold, then uncover them in the spring, two chores that often represent one-third of more of the budget. For another, wineries in isolated parts of China face growing labor costs: many people have either moved to the cities or are able to get better wages in competing agricultural sectors. And there is the issue of experience: most wineries in China are new and it takes years—more like decades—to fashion the best wines from a given vineyard.
This is not to discourage China wine producers. Ten years ago, the wine world asked if China had any good wines. Five years ago, it knew China had good wines and asked which ones were the best. Now it is asking which Chinese wines can compete on value.
But if it’s true Chinese wines have made great strides, it is also true that imports are racing forward, too. Local producers could look to better vineyard management to yield the fruit needed to raise quality. They could diversify the kinds of wines made, whether in terms of new grapes or styles, to give options to consumers interested in exploring. And reasonable entry-level pricing would allow more consumers to try Chinese wines and move up the price ladder.
Serious issues need to be address but there are still reasons to be positive. Even though many of the wines at the RVF tasting were sub-par, there were gems, too, at least to me as a consumer. Along with tasting notes about oxidization and volatile acidity, there were ones about delicate floral aromas, fresh ripe berries, soft and juicy fruit, balanced tannins and zippy minerality. It’s good that when getting a reality check, part of it is realizing that there are some tasty drops out there.
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