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China: Time to be taken seriously


The big story in the world of wine currently and, if I am honest, for a good few years now, is the swift expansion of China as a market for wine of all levels. Here is a report from Karel Roell on this burgeoning market.

Having lived across five continents during his youth, worked for over 20 years in investment banking, Karel is redeeming his sins and finally focussing on his passion: wine… His first encounter with the industry came during his 16th summer participating in a Mendocino county harvest. His cellar has since evolved into a serious pastime building long term relations with winemakers and negociants. Amongst his other passions are his family, cycling and his one year old pup.

“With our Dear Leader, Johnny Goedhuis freshly back from his trip to Shanghai and Hong Kong and Philippa Wright’s recent posting on fakes in China (Counterfeits in China, Oct 28th 2010), China seems to be on everybody’s lips these days, for a reason – per capita consumption is no where near Europe or the US, fine wine is by far the chic-est beverage to give or to conclude a business deal with, China has overtaken Germany as the largest wine importer this summer, and Hong Kong has surpassed New York as the world’s biggest wine-auction market since abolishing wine tax in 2008.

Unfortunately for every serious piece of news, there is always a funny China anecdote: Western visitors witnessing Chinese consumers mixing their Chateau Lafite with Coke (I have seen worse crimes 2 decades earlier during Hong Kong’s Cognac craze…), there is a run on ‘lucky’ 2008 vintaged Lafite (see Tom Stopford Sackville, Goedhuis’ Hong Kong MD’s blog entry on Lafite 2008) and that the latest thing to give at posh Chinese weddings are… cases of Lafite! Imagine the loss of face.

However the Chinese consumer looks to be evolving, wine has not yet become an every day occurrence at home but is by far the fashionable thing to drink when entertaining outside. Just by looking at the latest Hong Kong auction results – with each one a 100% sell-out since taxes were abolished in 2008. The response at the Hong Kong Vinexpo in June this year – when UGC’s wine tasting had run out of samples within 2 hours. The sudden interest in other First Growths and guaranteed provenance – record prices were paid for DRC’s Romanée Conti and La Tâche 2005’s last month and collectors paid 4 times over the odds to acquire guaranteed provenance Château Lafite Rothschild at last week’s Sotheby’s Lafite auction as mentioned in Tom’s blog.

The Asian wine consumer therefore looks to have become more sophisticated than previously thought and this could be excellent news for any premium wine producer that is not a Rothschild related name! What is also exciting is that China has finally accepted to allow sweet wines to be imported – it previously banned wines with over 250mg of sulphur per liter. This has prompted LVMH – the luxury industry’s grande dame to start looking for a Chateau Yquem ambassador in China.

But before we rejoice and stock our cellars high with the First Growths that have been left behind, Second Growths and Chateau Yquem, there is still some way to go before China reaches Western standards of wine consumption. China’s statistics are notoriously off the mark – I have a hunch that most of the data concerns bulk wine imported from high production areas such as Chile and Argentina to be bottled with China’s nascent wine industry (cleverly Lafite has started a Chinese JV in the Penglai peninsula!) the physical distribution of fine wine is still in its infancy- although French supermarket chains have started to cotton on, the main sales network through out China for fine wines are top notch hotels and restaurants.

So the Chinese market is developing in to a serious fine wine consumer with huge potential and the excitement looks likely to be justified only when consumers can get easier access to quality wine and wine is consumed with meals in Chinese family home on a daily basis. This is where the recent appointment of Jeannie Cho Lee MW as Decanter’s Asian contributing editor is very important. I have been an avid reader of her book the ‘Asian Palate’ published in 2009 by Asset Publishing – with many surprising food matches. You may find an introduction to the book by clicking here.”

Karel Roell