Saturday, June 29, 2013

Chinese wine heads to Europe

 The reality of the wine business model is that you pay attention to the product and your market will emerge. The grape has beaten off all competition for centuries and this will continue until it is everyone's preference. Southern China in particular is obvious, but also many other terranes throughout China. Better yet, China gas an unlimited supply of real growers.

The same holds true for India and the Himalayas.

Of course the industry is just getting going in the far east, but so what? I recall when Canadian wines were an awful joke. Then free trade was going to wipe out the protected plonk monopoly. Now our vineyards win awards and we own the the ice wine industry.

All I know for sure is that if I wished to hold a block of productive land onto multiple generations, the vineyard is the most secure investment possible with olive oil an excellent second.

Yunnan Red, anyone? Chinese wine heads to Europe

by Staff Writers

Bordeaux (AFP) June 19, 2013

Wine war fears already slowing French exports to China

Bordeaux (AFP) June 18, 2013 - Chinese wine importers have already started putting orders from France and other European countries on hold over fears of a hike in tariffs being triggered as part of a broader EU-China trade dispute, say leading figures in the sector.

Industry insiders attending this week's Vinexpo exhibition in Bordeaux revealed that China's decision to launch an anti-dumping investigation into European wine has created a backdrop of uncertainty that has resulted in buyers sitting on their hands.

"The simple fact that the announcement of an investigation has triggered a wait-and-see attitude from our Chinese customers who prefer to postpone deliveries rather than take the risk of seeing them subject to additional duties when they arrive in two months time," said Georges Haushalter, the chairman of the CIVB Bordeaux wine trade body.

Bordeaux stands to be hit far harder than any other producer region in Europe in the event of China's anti-dumping probe leading to punitive duties on French exports to a fast-growing and potentially huge new market.

China is Bordeaux's biggest export market and takes around one in five of the bottles produced in the renowned area, where up to 55,000 jobs depend on the sector.

That has led to frustration at how the sector has become caught up in a trade spat in which China appears to be seeking to punish France for its high-profile support for a move by the EU to impose anti-dumping duties on Chinese solar panels.

"We would like not to be held hostage to those discussions but while we wait for them to be resolved there is already an impact on the market," said Bernard Farges, the president of a group representing a number of Bordeaux wine producers.

"We are already seeing a slowdown in sales, or an increase in orders being delayed, even though absolutely nothing has been concluded or decided," he said.

A major exporter of Bordeaux wines to China said some Chinese importers, many of whom are already sitting on significant stocks, were looking to cash in on the current uncertainty.

"There are 8,000 wine importers in China. Many of them have come from other market sectors and the market still needs to find a proper structure. The pipes are a bit blocked at the moment and some are trying to take advantage to push prices down," the merchant told AFP on condition of anonymity.

On a visit to Vinexpo earlier this week, French Trade Minister Nicole Bricq attempted to reassure winemakers that punitive Chinese duties remain a distant prospect.

"There is no trade war with China, there are global rules for trade and they have to be respected," she said. "China's anti-dumping investigation will take six to eight months, that gives us plenty of time to negotiate with them."

For years the Chinese have been buying up wine from Europe, but with domestic wine production predicted to overtake Australia and Chile by next year, Tiana Wu is hoping European drinkers are ready to be tempted by a glass of her "Yunnan Red".

"We produce one million cases per year. We're exploring the possibility of exporting," Wu told AFP at Vinexpo in Bordeaux, one of the world's largest wine and spirit fairs.

"Our wines have a unique taste, and we want to see if consumers here accept it or not," added Wu whose family runs a wine business, Yunnan Red, in China's southern Yunnan province.

Vinexpo chief Robert Beynat says China's growing domestic wine production has enabled it to steadily climb the ranks of wine producing countries.

"By next year we expect them to be number six, ahead of Australia, Chile and a lot of countries. We are very happy about that," he said.

"Why? Because the more a country produces, the more wine a country drinks, and the more it drinks, the more it imports. This is the story of America 50 years ago."

The big question for Chinese producers, however, is whether or not their wine -- and other potential alcoholic exports -- can please Western palates.

Following the Chinese acquisition of Bordeaux vineyards in recent years, the producers of French wine now include Chinese owners.

Zhang Jinshan, a tycoon who has been producing Goji berry-based alcohol for 30 years, acquired Chateau du Grand Moueys, a historic estate in Bordeaux's Entre-Deux-Mers region where he also plans to build a golf course and spa.

Exhibiting for the first time at Vinexpo, Zhang displayed his Bordeaux wine along with his Chinese alcohol, with an eye on exporting some of his 10-million-bottle production, and a clear game plan.

Outlining his game plan, he told AFP: "We bought the chateau. Now we will create a wine merchant business to buy other wines to sell in China, and then we will import Chinese wine into Europe."

But while Zhang said he found it fairly easy to adapt to winemaking, the language, culture and business practices in Europe presented a challenge, though he remains optimistic.

"We will adapt, we will understand them and we will work in harmony," he said.

Vinexpo research estimates that the number of potential wine drinkers in China could be between 200 and 250 million people.

But Beynat warned that that per capita consumption remained small -- 1.4 litres (2.4 pints) per person per year versus 12 litres per year for Americans, 52 litres for the French and 23 litres for Britons.

Nevertheless, a record number of Chinese wine professionals at Vinexpo was fresh confirmation of the rapidly developing nation's influence as both consumers and producers, he said.

"For exhibitors, there are more Chinese, mostly in the spirit industry. In 2011 we had two, this year we accepted 18," he said, adding that Vinexpo would even hold an event in Beijing in November 2014.

According to Vinexpo, we are all drinking more wine. Worldwide wine consumption hit 2.6 billion cases in 2011, a 2.83 percent increase over four years, and the fair's analysts predict it will increase 5.31 percent by 2016.

Between 2012 and 2016, it is expected that wine consumption in China will increase by 40 percent, making it the second most lucrative market after the United States.
Vinexpo runs until Thursday.

No comments: