By Jim Boyce | Call it going against the grain. Between 2011 and 2017, bottled wine imports doubled in China as producers like France and Australia posted massive gains. There was one notable exception, the United States, which saw exports to China decline over that seven-year period, leaving it with just a 2 percent share and the burden of an extra 15 percent tariff levied this year.
I wrote about this situation for Vines and Wines, including advantages U.S. wines have that makes their performance surprising.
Food safety is a key concern in China and U.S. products tend to be seen in a positive light. The U.S. also uses varieties likeÂ Cabernet Sauvignon, Merlot and Chardonnay that consumers know best. Lots of Chinese have lived, worked or traveled in the U.S. or are familiar with its food and drink culture via the media. And there have been ample promotions, like this 21-city master class tour by California Wine Institute that took U.S. brands past usual stops like Beijing, Shanghai and Shenzhen to new enthusiasts.
The downside is pricing and status. U.S. winesÂ don’t fall into the “bargain bin” category nor are they status buys like leading labels from France and Australia, notably Lafite and Penfolds. Because many importers and distributors seek huge markups, the price and traceability of U.S. wines makes them less attractive. And there is an issue of visibility:Â I once took a Napa Valley Vintners group on a retail tour of Beijing and we found few U.S. wine options, though we did spot a Silver Oaks knockoff. (See it on my new page dedicated to fun, fake, odd and old labels.)
This last point ties to what I think is general shoulder-shrugging by many in the U.S. trade about the China market. Unlike Australia, Chile and Italy, among others, the U.S. drinks nearly all the wine it makes, with only 1 out of every 250 bottles destined for China. Six times more that that reaches Canada. While the potential of the China market continues to lure some, this country is a source of substantial income for few.
That doesn’t mean China is irrelevant. Hong Kong ranks third by value and fifth by volume for U.S. wines, and is a gateway to continental China. But the rise of U.S wine seems at least partly a matter of timing, of waiting for an increase in taste-based consumers in a nation where wine sales are still tied to gift-giving and entertaining.
My sense is those who drink U.S. wines here tend to be in this taste-based crowd, to know more than the average buyer. This means they understand that U.S. wines are not the cheapest and are likely pickier about sourcing, thus providing insulation against dubious bottles. And while that might not translate into huge sales now, if the trend of Chinese exploring and enjoying wine continues, it at least promises a rosier future for U.S. wines.
Anyway, I covered these issues in far more detail in the Vines and Wines article. I also presented a few ideas that might help push things along, such as more promotions on a national rather than state or regional level; more appeals to Chinese who have worked, studied or traveled in the U.S., not just in well-known wine states like California and Oregon but others like New York and Virginia; and increasing U.S. wine visibility, notably in “American” restaurants, where it would seem natural to have California Cabernet by the glass instead of Chilean or Australian red. See the full article here.
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