China's wine-growers under pressure from foreign rivals
China has an ancient and flourishing wine industry, but domestic producers that dominate the market are under increasing pressure from foreign growers trying to attract the country's new wealthy.
Asia is expected to double its consumption of wine between 2006 and 2011, and a large part of that growth will come in China both in terms of demand and supply, industry experts at Vinexpo Asia in Hong Kong said.
"The true wines of the new world are the wines of China or India," said Robert Beynat, director of Vinexpo Asia, Asia's largest wine and spirits exhibition, where nearly 700 exhibitors from 32 countries gathered this week.
Sixteen of the exhibitors are Chinese growers.
China has a long history of producing wine, with evidence of large-scale production as far back as the Han Dynasty, around 2,200 years ago.
The country's economic growth over the last 25 years has been matched by an increased demand for wine.
China entered the global top ten of wine consumers in 2005, but still 95 percent of its consumption is from Chinese-made wines.
"For 25 years, since it has been able to ensure a consistent supply of crops to feed itself, the Chinese government has encouraged the development of vineyards and of the production of Chinese wine," said a recent study by the French embassy in China.
In order to take advantage of this growth, French drinks companies were among the first to set up joint-ventures with Chinese firms.
Dragon Seal (backed by Pernod Ricard), Dynasty (Remy Martin) and Changyu (Castel) have become the leading brands in China, backed by the expertise of the French firms.
"The future of the Chinese market is linked to increased living standards among the middle class," said Wan Yanan, an executive with Dynasty, which is doubling the size of its operation in the northern city of Tianjin.
But while Beynat said the quality of Chinese wines was improving, the growing middle class is also keen to show off its new wealth by experimenting with foreign drinks, a demand sellers are well aware of.
China "is a market which is not yet mature and it is important to begin trying to penetrate it now to see the benefit in several years," said Christophe Chateau, director of the Cotes de Bordeaux group representing 1,800 wine producers in southwest France.
"We have begun promotion campaigns, notably with (supermarket chain) Carrefour and we are also in touch with the major chefs in Hong Kong, Macau, but also Beijing and Shanghai," Chateau said.
Christopher Geoffroy, director of the Sofitel hotel in the southern city of Dongguan, said there is a "true revolution in the consumption of wine in China, particularly in high-end restaurants."
"While some clients still only rely on name and price, lots of Chinese are becoming interested in oenology (the study of wine and winemaking) and a wider range of wines, and prices,"Chateau told.