The Sweet Taste of Success(1)

Gerard Colin is in despair about the state of his vines. Pacing along a line of barren brown twigs, the French winemaker stares balefully at the ground, then sinks to his knees beside a particularly spindly specimen. "What a ragamuffin," he groans. "How can I make grapes with wood like this?" Behind him, two Chinese farmers exchange anxious looks. Colin calls his assistant over to translate, and asks for a pair of pruning shears. Snipping the dry wood almost down to the ground, he tells the farmers not to worry about a small harvest in the fall: "If you let such young vines grow too tall too fast, sure, they'll make lots of grapes next summer, but they'll be dead in five years. We have to slow them down. Making good wine takes time."

Colin knows good wine. He worked for four decades among the vines of Bordeaux before moving to China five years ago as a wine consultant for the fledgling Grace Vineyard in Dongjia village near the Shanxi provincial capital of Taiyuan. And although he's only concerned for now with a small plot of poorly cultivated Cabernet, he might as well be talking generally about China's wine industry, which remains the viticultural equivalent of a spindly ragamuffin.

Serious winemaking was virtually unheard of in China before the 1980s, when the government began to revive long-dormant vineyards in the coastal provinces of Shandong and Hebei. The few Chinese who bought wine tended to treat it as an exotic curio to be displayed on bookshelves, not savored. Chinese have long preferred baijiu, a spirit distilled from grain. But in 1996, health concerns about hard liquor and worries about potential grain shortages led the government to renounce baijiu; Li Peng, China's then Premier, called instead for wine to be used for toasts at Communist Party banquets. This policy, along with a spate of news reports about the health benefits of wine, caused a breakthrough in the industry. With domestic producers unable to meet the new demand, imports poured in, increasing tenfold from 1996 to 1998. And as China's middle class expanded, wine emerged as a major status symbol. "Wine is the latest must-have item in urban China," says Patricio de la Fuente Saez, director of Links Concept, a Hong Kong-based wine distributor. "People want a fridge, a car, and a bottle of wine on the table. It means you've arrived."

Even so, the average Chinese drinks just 0.3 liters of wine a year, compared with 12 liters for Americans and 59 liters for the French. Smelling the heady bouquet of ripening profits, investors have been looking for ways to play China's emergence as a nation of wine enthusiasts. When Dynasty Fine Wines Group, a vintner in Tianjin, offered stock to the public in January, retail investors placed orders for 625 times the shares on offer, and the stock surged 43% in a few hours. Foreign companies want in, too: Rémy Cointreau owns nearly 25% of Dynasty, and Italian spirits company Illva Saronno recently paid some $58 million for 33% of a Shandong vintner, Yantai Changyu Pioneer Wine.

Between them, China's three largest wine producers—Dynasty, Changyu and China Great Wall Wine—control about half of the country's wine market. But they've typically specialized in cheap, mass-produced brews. These days, however, a growing class of mainland vintners is attempting to create wines to rival foreign imports. Several entrepreneurs have established instant wineries, importing everything from grapevines to foreign experts like Gerhard Markowitsch, who jets in regularly from Austria to concoct Cabernet at Bodega Langes in Hebei, a winery whose mustard-colored buildings were designed to evoke Vienna's Schönbrunn Palace. The sprawling complex—owned by Gernot Langes-Swarovski, a scion of the Austrian crystal family—boasts a four-star hotel, China's first wine spa (using beauty treatments produced on site), wooden tubs where visitors can stomp grapes, and a state-of-the-art winemaking facility so immaculate that it doesn't even smell of wine. Beneath it, oak barrels of maturing wine are nurtured by soothing tunes. "Our wine listens to music," gloats managing director Ren Jing. "We use the most current research."