Wine in China?

My initial reaction to the above question is They make that there? and I’ve been in the industry for over 10 years. The following blog post is a brief look into the world of China and wine.

The China Syndrome

According to Mike Veseth in his blog The Wine Economist, “the China Syndrome is both the dream that China will buy all the goods we try to sell her and the fear that she will return the favor and take over our markets.”

After studying various scenarios of China as an emerging market, I still can’t seem to wrap my mind around rumors of China becoming the new France of wine. As reported in China Wine Industry by 2014, China’s wine industry was valued at RMB 22 billion (3.2 billion USD) in 2009 and it is estimated to grow over 18% CAGR for the next five years. In comparison, US and French wine industries for 2006 were valued at 30 billion USD growing 2.1% and 290 billion USD with negative growth prospects, respectively.

An examination of several factors have led wine industry experts from around the world to conclude that in 50 years China may indeed be the New Old World, the New New World and the Future World of wine.

1) Wines

Be glad you can’t rush out to your local Uwajimaya to find Chinese wine as of yet. According to tasting notes from Mike Veseth, a 1999 ChangYu Cabernet Sauvignon confirmed the internet rumors of Chinese wines tasting of coffee grounds and ashtray with a hint of urinal cake.

Yuck! He admits to finishing the wine, an act of which I cringe, although of which I can easily relate!

And unfortunately, wine expert Jancis Robinson has confirmed the generally distasteful:

My two previous visits had been in 2002 and 2008 and on the second I had been deeply depressed by the fact that, while the rest of the world was making better wine with every vintage, the quality of Chinese wine seemed to have stagnated. The typical Chinese wine still tastes like a very poor quality Bordeaux Rouge: sometimes not recognisably vinous, thin from overproduction, tart from underripeness, and often tough, thanks to an obsession with the unyielding Cabernet Sauvignon grape that has dominated vineyard plantings in China’s new wine-drinking era. This seems to me to be precisely the sort of wine least likely to woo a neophyte wine drinker, and least likely to be a good match for Chinese food.

Robinson’s sentiment leads us directly into the production of Chinese wine.

2) Production

Wine grape production in China was estimated at 400,000 tons in 1999 and is expected to be 960,00 tons in 2010. These are giant leaps and bounds in production, that are not estimated to slow any time soon.

There is an old truth in the wine industry that “great wines can only come from great grapes.” That said, unfortunately the incentives of Chinese wine growers are misaligned with quality wine. In order to minimize risks, growers divide up their leased parcels of farm land to plantings of five or six different crops. And to further mitigate their crop risks, they often harvest prematurely when grapes are too high in acids and too low in flavor compounds. Finally, they are financially incentivized to maximize quantity and not quality. Therefore, China’s 960,000 tons are derived from 1000′s of micro-farmers strewn across the country.

Furthermore, a BBC estimate of Chinese wine production continues to add surprise to my research findings when I learn “Certain countries, most notably Australia, may no longer be able to grow wine in bulk quantities by 2058 because of a lack of water.” Wow, this discovery of natural resources undoubtedly resonates in my mind and spotlights a huge issue facing the wine industry and… the world no less.

3) Wineries

ChangYu

ChangYu is China’s oldest winery. Again, I am struck by the first page of ChangYu’s website where I come across the following summary:

Although the history of grape planting and wine making in China dates back to the Han Dynasty (206 BC-220 AD), the industrialized production of wine was started by ChangYu.

I, in my 10 years as an American winemaker making wine from California to New Zealand, have never considered the industry as industrialized. Perhaps this is the quintessential view that will drive the Chinese wine industry in one of two directions: plonk wine or luxury good. And then what will the rest of the world’s wine industry be like? Markets? Prices? Yikes!

Grace Vineyards

On the flip side of bulk wine production is a little family owned winery with the traditional bootstrapping story.

When the Cultural Revolution (1966 to 1976) engulfed the middle kingdom, a young Chan Chun Keung was sent off to Inner Mongolia to work as a shepherd. Later, he was promoted to factory worker. When one considers how may people perished or were expunged during that tumultuous upheaval in China, Chan did not actually fare too badly. He even managed to attend and graduate from university in Taiyuan, capital of Shanxi Province. Overseas Chinese were, however, considered a group apart from the local population and were treated somewhat differently, and were even allowed to leave China, unlike the native Chinese.

In 1975, Chan Chun Keung migrated to Hong Kong and arrived in the British colony with just HK$5 IN HIS POCKET. Two years later, his eldest daughter Judy was born, followed later by two boys. In Hong Kong, with time, Chan started a trading business between Indonesia and China. His years of having lived, studied and worked on the mainland proved invaluable and when, two decades later he decided to start a vineyard, he went back to Shanxi to sink his roots there again. Thoughts of his grandfather’s earlier reverse migration from Indonesia back to China must surely have crossed his mind.

Next Time

So far, many interesting characteristics have emerged from this preliminary investigation into Chinese wines. Further examination of the China Syndrome will be made in the next post highlighting consumption, imports and marketing of Chinese wine.

Cheers,
WineGirl