The scene stopped me in my tracks. There, on the street in the middle of the bustling market, stalls filled with fake Longchamp bags and knockoff Ralph Lauren, was a young Chinese man standing behind a table wearing a portable microphone and hawking vacuum-powered wine-pump openers.
Is this the sign that wine culture has really arrived in China?
The enthusiasm of the Chinese for top Bordeaux has already pushed up prices for the 2008s and 2009s. Just imagine what will happen to wine prices overall if even only 10 percent of the Chinese population – the equivalent proportion of Americans who regularly drink wine – is bitten by the wine bug.
China clearly is on the way. Look at the results from any recent auction in Hong Kong. Paul Pontallier, technical director of Chateau Margaux, told Bloomberg News that one-third of Margaux’s sales were in China, Hong Kong and Macao.
“The Chinese are drinking wine,” insists Simon Tam, head of wine for Christie’s China. While Tam can’t gauge how much wine bought by the Chinese at auction is for drinking as opposed to investment, he noted, “You can’t drink 24 magnums of Chateau Ausone immediately.”
Then, he added, “The Chinese love to entertain and honor their guests with famous wines.”
Mark Conklin, general manager of Hong Kong’s JW Marriott hotel, known for its wine program, recalled a recent group of eight Chinese wine lovers who consumed more than $19,000 of high-end French wine at lunch at the hotel’s well-regarded Man Ho restaurant – “and they weren’t mixing it with Coca-Cola the way they might have 10 years ago.”
Preference for luxury
Chinese consumers have a reputation for being label-conscious and seeking prestigious products to impress friends and colleagues. So it’s not surprising they should reach for Bordeaux’s luxury labels such as Chateau Lafite-Rothschild and Chateau Pétrus.
“If you have a bottle of Lafite on your table while you are eating stir-fried noodles, no one can tell you that you are ignorant or wrong,” explained Andrew Manktelow, sales director of ASC Fine Wines, a major wine importer and distributor in China.
But the market is evolving beyond status. There are signs a more mature wine culture is taking hold.
Ross Meder, managing director of Margaret River Wines, a small shop in Hong Kong’s Wanchai neighborhood that specializes in wines from Australia and New Zealand, had few Chinese customers when he opened about four years ago. Now he estimates 20 to 30 percent of his customers are Chinese. And he notes that one key barometer – the drinks offered at weddings – has shifted from beer or Cognac 20 years ago to wine today.
“The wine culture is here to stay,” he said. “Now it’s mainly the young, westernized Chinese (who drink wine). The label is still important, but more and more are experimenting with less well-known wines.”
In part, that’s because they’re more willing to learn about them. At a recent tasting, Derek Ho of ASC Fine Wines explained the labeling of Maison Louis Jadot’s Burgundies. A lineup of famous Bordeaux was designed to draw guests – 95 percent of them Chinese – but Ho relished an opportunity to teach his guests about Burgundies and Spanish wines.
Drinking patterns in restaurants are changing. Five years ago, a mixed group of Chinese and Western business types might drink wine in fine restaurants. But now at Lin Heung, a boisterous Cantonese restaurant in Central Hong Kong filled with Formica-topped tables, a group of young Chinese pours upscale wines into the Riedel glasses they toted along.
And along nearby Hollywood Road, wine bars filled with Asian customers – where a glass of what might be called “supermarket wine” sells for $10 – are displacing the antique dealers who have been there for decades.
What prompted the change? Tam traces the return of Hong Kong to China in 1997 as a seminal event: “Mainland Chinese, including a burgeoning middle class from Shanghai and Beijing, could visit easily and experience Western culture and tastes, including wine.”
Another boon came a couple of years ago when the government eliminated the duty on wine. Emmanuel Cruse, owner of Bordeaux’s Chateau d’Issan, suggested that lifting an “onerous tax” stimulated a market already being defined by the emergence of the Hong Kong wine auction market.
Yet lifting the tax brought chaos. Prices dropped – stimulating purchases – but the need for an importer’s license disappeared. “Anyone could import wine,” Meder says. “Wine shops sprang up like mushrooms after a rain. Some folded after six months, but many are still around.”
Even amid the chaos, savvy producers see the wisdom of establishing Chinese beachheads. Most are European. Cruse estimated that brokers and Bordeaux negociants currently direct 85 percent of their energy at selling wine in China. Pierre-Henry Gagey, co-president of Burgundy’s marketing trade group and head of Louis Jadot, announced a budget of about $580,000 last year to “conquer the Chinese market.”
Not to be left out, Opus One just opened a sales office in Hong Kong. The Napa Valley Vintners last month took 40 winemakers on a Chinese trade mission, similar to trips planned by California’s Wine Institute. To target the Chinese middle class, the institute is also bringing Chinese “lifestyle” journalists to visit California Wine Country.
Big jump in exports
Something is paying off. U.S. wine exports to China in 2010 were $45 million, up almost 400 percent from 2006, according to Linsey Gallagher, the institute’s director of international marketing. While China represents a “small base,” she says, California wineries “have a great interest in it” – not unlike the interest in Japan 30 years ago.
So smirk all you like at adding Coca-Cola to Chateau Pétrus. China’s impact on the wine market is plenty serious. The only one laughing might be the man with the vacuum-powered wine openers – all the way to the bank.
This article appeared on page H – 1 of the San Francisco Chronicle on Sunday, May 8, 2011