China's wine market is growing rapidly - and investors from the "Middle Kingdom" are snapping up goods worldwide

It was left to "Big P", the US American celebrity critic Robert Parker, in his partial withdrawal from his "Wine Advocate" announced before the New Year, to show the world where things will be happening in the global wine trade in future: in Asia. The 50,000 subscribers of "Advocate" will now be provided with the - for many - essential Parker points from Singapore as well as Maryland. "Big P" has sold shares to three Asian investors and handed over his position of Editor in Chief to his previous correspondent in the Asian-Pacific region, Lisa Perrotti-Brown. In China, the largest market by a long way, the wine consumption is now growing by around 20% annually - above all "Ganhong", as the Chinese call the dry red, is enjoying rapidly increasing popularity.
Photo: Viticulture in China: long tradition, in terms of production, now it is in sixth place .
Photo: the three largest wineries – ChangYu, Great Wall/COFCO and Dynasty – share around half of the domestic market.
Photo: Li Demei: professor of oenology and wine growing from Beijing.
Photo: Grace Vineyards in the province of Shanxi.
Foto: Grace Vineyards in der Provinz Shanxi.
Photo: Harvest worker
Photo: Harvest worker
Photo: Chateau ChangYu-AFIP: a piece of Disneyland in Loire style.
Photo: ChangYu AFIP: wine cellar
Photo: ChangYu: no. 1 in the country with 100 million bottles produced annually.
Photo: Wen Jiabao

The Chinese wine regions are thousands of kilometres apart, strewn across the country

With a good 500,000 hectares of vineyard, the "Middle Kingdom" now ranks at fifth place in the world, behind Spain, Italy, France and Turkey. In terms of production, it is in sixth place behind Italy, France, Spain, the USA and Argentina. For the period from 2010 to 2014, a 77% increase in production is expected. The Chinese wine regions are thousands of kilometres apart, strewn across the country, from Qingdao and Yantai by the sea in the east to the Yellow River and the Helan mountains of Ninxia to Xinjiang in the west with its extreme climate. However, grapes are also grown in Yunnan in the south west as well as right up in the north east.

Regarding the quality of the Chinese wine, up until a few years ago the experts were in agreement: thumbs down. However, this no longer applies without restrictions. British wine critic Robert Joseph says that if you ignore the wines from the Far East, you are on the wrong path. And the only German with the title Master of Wine, Caro Maurer from Bonn, strongly believes that China will develop into one of the leading wine growing nations in the world in the next ten years.
It is fitting that in September 2011 at the World Wine Awards by the English magazine "Decanter", a Cabernet from China gave all the Western competition a run for its money for the first time. It is sold at home for a mere €15. But in times, in which more and more rich Chinese people are discovering wine as a luxury cultural good and a status symbol, this can change of course: "Bodega Langes" for example, owned by Gernot Langes-Swarovski, in Changli, a three-hour drive away from Beijing, offers the members of its wine club exclusive vintage bottles with real Swarovski crystals, at the lucky price of 888 Yuan - which equates to €97.
Photo: Dynasty Wines

"Big is Beautiful"

When it comes to taste preferences, for the 20 million Chinese people who drink wine at least occasionally, these are widely fixed: It has to be "Ganhong", a dry red, and preferably from Bordeaux or Burgundy! For wine growers from Bordeaux, China is now the most important export market, even ahead of Great Britain and Germany. In the Chinese import statistics, French wines, which have a market share of almost 50%, are followed by Spain, Australia, Chile and Italy. Only one out of ten bottles, which is consumed in China, contains white wine - not very favourable for the German producers. However, a possible almost 200 million further Chinese people, who can regularly afford to enjoy wine, shows potential. And: In 2011, the People's Republic became the most important export destination in Asia, according to the Deutsches Weininstitut (DWI) [German Wine Institute], even ahead of the longstanding market leader - Japan. 40,000 hectolitres of the German grape juice went to China - still 15% more than in the previous year.

With all the enthusiasm about posh labels with melodious Chateau names from Europe: More than 80% of wine consumption in China still comes from native plants. Thereby, the slogan "Big is beautiful" also applies here. Indeed, there are around 900 wineries spread all over the country, but the three largest – ChangYu, Great Wall/COFCO and Dynasty – share around half of the domestic market. According to the professor of oenology and wine growing, Li Demei from Beijing, the Dragon Seal brand is responsible for almost a third of Chinese wine export.

Li is not only perhaps the best connoisseur of the Chinese wine market (and is therefore the key note speaker at the International Wine Business Conference by the publishing company Meininger Verlag, on the day before ProWein 2013 in Düsseldorf) – he also travels all over the country as the "Flying Winemaker", and is also involved in the promotion of the renowned vineyard Grace Vineyards, in the province of Shanxi, 550 kilometres south west of Beijing. There, the industrialist and wine lover Chun Keung Chan fulfilled a dream in 1997 by setting up an 80 hectare model operation equipped with state of the art technology. The premium wine of the house "Chairman's Reserve", created according to a French model, can be found in any Chinese luxury hotel; in Germany it is offered for a respectable €34.
Photo: Chateau ChangYu-AFIP

At ProWein 2013, ChangYu will take part as an official exhibitor for the first time

The fact that the Chinese will not content themselves with providing their growing domestic market with wine in the long term, they have also been working on export strategies for a long time, is obvious. "We are striving for the European market", confirms Susan Tan, export manager of industry leader ChangYu, openly. ChangYu is no. 1 in the country with 100 million bottles produced annually. In order to improve the quality of their wines, the companies from the Middle Kingdom have purchased a great deal of expertise in the past ten years, with advisors and oenologists primarily from France and Italy. ChangYu, which incidentally began wine production in 1892, with the help of an Austrian cellar master in Yantai, plans to plant a further 700 hectares of growing land in Xinjiang, Ningxia and Shaanxi by 2014. At ProWein 2013, ChangYu will take part as an official exhibitor for the first time - together with a planned 13 other companies from China. Their number and booked area have tripled compared to the previous year. The trade fair also expects a further increase in specialist visitors from China, especially as the ProWein marketing activities have been significantly intensified there. And in November this year, ProWein China will take place for the first time in Shanghai.

A few years ago, Australian, French, Italian and Portuguese investors (hence the curious name) created a piece of Disneyland in Loire style, not far from Beijing with the Chateau ChangYu-AFIP, which is very popular as a tourist attraction. The French have already been active as investors in this field since 1980 - and are now also experiencing how the pendulum is swinging back.
Photo: Wine Tasting

Investors from China with sufficient capital are going on a buying tour

Initially unnoticed by the world, the Chinese, including some business people from Hong Kong and Singapore, have recently bought at least 20 Chateaus in Bordeaux and Burgundy - including names such as Latour-Laguens, Laulan-Ducos, Richelieu and Chenu Lafitte. When a real icon of the "Grande Nation"- the Chateau de Gevray Chambertin, dating back to the twelfth Century - fell into Chinese hands last summer, in an auction for almost three times the estimated value, emotions ran high for the traditional Burgundians. "France is selling its soul", protested the president of the Wine Grower's Association of Gevrey-Chambertin, Jean-Michel Guillon, "our politicians must take action!". Some small comfort for the French: Even in other countries such as Australia, Chile, New Zealand or Bulgaria, investors from China with sufficient capital are going on a buying tour. And thereby, they are by no means only focussing on the home market, even though the annual per head consumption of just one litre by the Chinese, still leaves a lot of upwards leeway.

Whatever. There is no way around the fact, that the red giant has long become an important player in the global wine business. The Chinese wine industry now has a turnover of around €3 billion per year, and almost 25,000 importers and traders, primarily in the metropolises of Shanghai, Beijing and Guangzhou ensure the growing distribution of the red and white wines. Since Hong Kong abolished its high import taxes for wine in 2008, the "Gate to China" is also booming as a wine trading centre. Rai Cockfield, founder and CEO of the trading company Altruistic Boutique Wines, with headquarters in Hong Kong and Beijing, sees things quite clearly: "The wine market in China today is where the American one was 30 years ago - but the Chinese will catch up much more quickly.“

Thomas Brandl