“A very famous Bordeaux Château is about to announce a major investment in China.” This was Li De Mei’s tantalising sign-off at the end of perhaps the most relevant of many presentations given at a recent get-together of international wine luminaries in Hong Kong, WineFuture. Could this be connected to the rumour that Pierre Lurton, director of LVMH’s Châteaux Cheval Blanc and d’Yquem, has been overseeing vine plantings near the Tibetan border? I spotted Cheval’s PR person at the conference.
But of course the much-hyped Chinese wine market is about more than a handful of investments by the likes of Château Lafite, the first growth whose wildly inflated prices in China are now on the wane and which is engaged in a joint venture to produce wine in Shandong in the east of the country. Per capita wine consumption in China is still minuscule but the total wine market has grown exponentially, which is why there were so many wine producers gathered in Hong Kong, both for this conference and the official Hong Kong trade fair before it.
The relationship between the wine markets of Hong Kong and mainland China is an awkward one. Hong Kong abandoned duties on wine in February 2008 and has achieved its aim of becoming Asia’s wine hub. Auction totals from fine wine sales now comfortably outstrip those in London and New York. According to one of Hong Kong’s three resident Masters of Wine, Debra Meiburg, there are now no fewer than 350 wine importers in this tiny commercial honeypot, but 79 per cent of them have fewer than 10 employees and many of them have only two. Although virtually all of the major British fine wine traders have set up a stand in the old colony, they must find it increasingly difficult to make much impact.
Wine duties in China are still quite high so, of course, the level of smuggling between Hong Kong and the mainland has soared. As Don St Pierre Jr of ASC, one of the three best-known foreign-owned wine importers in mainland China, points out, even Hong Kong’s famously thirsty residents are not actually drinking the billion dollars’ worth of wine it imports each year. (Nevertheless a world map on which each case of fine wine is represented by a tiny light would still be dominated by the brilliance generated by Hong Kong – with other notable clusters in Bordeaux and Corsham, Wiltshire, site of Octavian’s fine wine warehouse.)
Don St Pierre, needless to say, is calling for much more stringent checks on trucks travelling into the mainland. It must be frustrating to have to rely on the Chinese government’s impressively detailed official statistics, knowing they represent only a fraction of the wine that actually makes its way into China. Official imports, for the record, increased fivefold between 2007 and 2010.
The Chinese government has deregulated the wine business, much to St Pierre’s dismay, so the number of licensed wine importers or distributors in China has risen from 1,000 to 20,000. Although, as his old arch-rival Ian Ford of Summergate makes clear, he would be hard-pressed to name 200 companies with a completely engaged, legitimate wine business rather than opportunistic outfits trying to make a buck out of China’s current love affair with the grape. A very substantial proportion of sales are for “gifting”.
The French, or rather the Bordelais, have dominated imports for some time but, as China’s most respected sommelier, Yang Lu of Shanghai’s Peninsula Hotel, explains, tastes are changing. Two weekends ago, auctioneers Acker Merrill had huge success selling the contents of an American burgundy lover’s cellar in Hong Kong. There are dangerous signs that China’s (still small) nucleus of seriously well-heeled wine buyers may now be turning their attention to Burgundy. Dangerous because the quantities of top burgundy produced are so tiny that Chinese interest could upset the market. “DRC” (Domaine de la Romanée-Conti, Burgundy’s most famous domaine) could become the new Lafite – which is remarkable when one considers that as recently as two years ago, Aubert de Villaine of DRC went to Beijing and Shanghai to present, at free tastings, his wonderful 2005 vintage. According to Marcus Ford of Pudao, a subsidiary of Summergate, these events were, incredibly, very poorly attended. The Chinese wine market is indeed a volatile one – and one in which fakes (particularly of Lafite and DRC, and often of pathetic quality) are rife.
For the moment, Yang Lu reports, champagne is difficult to sell by the bottle, yet that situation could change overnight. The Chinese are even beginning to drink white wine – although it probably needs to be called “pale” or “golden” to distance it from the association in Chinese culture of the colour white with death.
According to Li De Mei, only about a 10th of China’s 400,000 hectares of vines are devoted to wine production, but there are now more than 900 wineries all over the country, just over half of them in Shandong where maritime influence keeps winters mild but also brings the risk of humid summers and rot. The most exciting new region is Ningxia. But here, as in so much of China, winters are so severe that vines have to be individually buried by mounds of earth in winter and uncovered each spring. Now that so many young Chinese have moved from country to city, labour costs are a major factor in wine production.
Li De Mei reported matter-of-factly that the official figure for wine production in 2010 of 10.9 million hectolitres (about a fifth as much as France) includes 1.37 million hl of wine imported in bulk from the likes of Chile and sold as though it were Chinese. There has recently been enormous investment by Chinese wine companies in creating supposedly luxury brands of Chinese wine, although most of the money has gone into extraordinarily lavish packaging and the “marketing” costs inevitably associated with a market as unregulated as China. The actual wine itself can often be remarkably similar to the one sold by the same company at a 10th of the price.
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