China's growing taste for wine

Booming wine consumption in China is leading to a growth in locally produced wines but as Chinese tastes become more sophisticated, local wineries are finding that they need to play catch up in terms of quality and vintage.

The coastal city of Yantai, home to over 10,000 hectares of vineyards in Shandong Province is regarded as China's Bordeaux by the locals.

Dozens of wine enterprises have set up operations in the region, which has the latitude roughly similar to the Bordeaux region in France.

Many of China's leading winemakers are expanding rapidly to cater to change in China's taste buds, and the surge in demand for wine.

Once the preserve of whiskeys and spirits, the Chinese consumer is fast changing its palate and newly affluent Chinese such as Jenny Lee have been at the forefront of this taste revolution.

She and her group of friends are attending a wine tasting event to learn more about wine; useful knowledge in China's increasingly sophisticated business environment.

Once drinkers of beer and local spirits, many professional Chinese are choosing instead to toast to what they perceive as the more refined and healthy image of grape wine.

By 2011, Chinese drinkers are expected to down more than 1.1 billion bottles of wine or 828 million litres of wine a year, double the figure in 2007, according to a study by the International Wine and Spirit Record in London.

"There is the factor of culture involved here, we all feel that red wine is suitable for romantic and very elegant occasions," said Jenny Lee.

With wine consumption rocketing, local wineries across China are springing up to meet the demand.

More than 100 wineries have opened since 1996 and there is an estimated 500 vineyards across China, which supply 95 per cent of the wines consumed domestically.

Great Wall Winery, one of the leading local brands in China produces over 50,000 tons of wine each year from its 3 main production areas in North China.

In its vineyard in Shandong province, grapes are grown and harvested in cooperatives with local farmers.

To raise standards, the company invested millions in foreign imported technology used in the pressing and processing of the grapes.

Together with Changyu and Dynasty Wines, Great Wall controls over 50 percent of the total local market share and is a favourite amongst younger professionals.

Chosen as the official wine sponsor of the Beijing Olympic Games, the company is also moving increasingly into premium labels and has built underground cellars to store its higher grade wines.

Zhong Wei Ming, the General Manager of the company's Shandong operations believes that it will only be a matter of time before Chinese wine becomes internationally recognised.

"Grape wine which used to be consumed only by the minority is fast entering the dining rooms of Chinese people and becoming consumed by a large number of people. I believe that China will soon become the biggest wine consumer as well as the biggest wine producer in Asia," he said. 

Like other leading brands, Great Wall Wine is targeting international markets. Its wine is already sold in over 20 countries and regions including France, Britain, Germany and Japan and has developed relationships with various European and Asian supermarket chains to market their products.

Many local producers are developing higher quality products to tap into the increased purchasing power and sophistication of wine drinkers.

Chinese wine used to sell for approximately $5 US dollars in department stores, but now the trend is changing. According to recent figures by the French based wine trade show Vinexpo, bottles priced at $10 US dollars have grown by 110 percent and leading brands like Changyu and Great Wall are now producing wines that cost hundreds of US dollars.

Despite the increasing sophistication of Chinese wine producers, its quality is still very much in question.

To make up for the domestic shortfall, many local brands import bulk wine from countries like Australia and Chile, combine it with local ingredients and sell it as Chinese bottled wine.

Counterfeit wines have also emerged as a growing trend in China's booming wine market.

Experts like Dorian Tang from ASC Fine Wines, which imports foreign wines to China said these developments have affected the quality and image of local wine.

Another issue, she said is the relative youth of the local industry, in addition to quality of grapes grown.

"In some of the Chinese wineries I think their vines are quite young, in Europe according to the EU laws, any vines under 3 years old you cannot do any wine production but in China we don't have such laws yet so I think more people should follow the rules in other countries, in France or in other European countries so I think the quality will be improved," she said.

For increasingly educated and discerning Chinese wine consumers, like IT Manager Peter Zheng, Chinese wine has a lot of room for growth. He said he occasionally drinks locally produced wine, but only at karaoke lounges and bars.
"I have to say local wines, Chinese made, is only good at KTV (karaoke bars)," he said while grimacing.

With a huge consumer base and a growing number of wine producers, China is no doubt the market of the future, but experts agree that it will take many more years for it to fully mature.