Temecula wineries go after Chinese market

A group of Temecula winery owners is joining Riverside County Supervisor Jeff Stone on a six-day November trade mission to Hong Kong in hopes of one day cashing in on a growing Chinese thirst for wine.

The group will attend an international wine and spirits fair and network with government officials and others in an attempt to get a foothold in the Chinese wine market, where sales jumped 20 percent to $2.8 billion last year, according to the county Office of Foreign Trade.

"If we can grow our export business, that means we're going to have to add more jobs," said Tom Freeman, the county foreign trade commissioner who works for the county Economic Development Agency.

The group's itinerary also calls for one day to be spent in Shenzhen, a city just north of Hong Kong.

The trip costs $2,588 per person. Freeman said everyone including Stone is paying their own way.

Temecula Valley Wine Country produces far less wine than its Northern California counterparts, which also have far greater distribution.

But that hasn't stopped local vintners from trying to sell overseas.

The efforts have produced mixed results. Foreign interests have made inquires about Temecula's Wine Country in the past few years, and some wineries have even negotiated very small deals with importers from Taiwan, Singapore and Hong Kong.

But Bill Wilson, of Wilson Creek Winery, said he lost $15,000 after a distributor who agreed to deliver Wilson Creek wines to China failed to pay up.

During a tour of China with non-Temecula wineries two years ago, Wilson said, he wasn't allowed to give out samples because his wine supply was quarantined.

Still, Wilson said he's willing to give China another try and is going on the trip.

He and others are encouraged by China's recent lifting of tariffs on wine imported into Hong Kong.

The Asian wine market excluding Japan is expected to double by 2012, according to the Office on Foreign Trade.

"If (the Chinese and U.S. governments are) trying to play nice, we'll play nice," said Wilson, president of the Temecula Valley Winegrowers Association.

While Chinese wine drinkers tend to favor either highly expensive or very cheap wines, Hong Kong, a former British colony, has more of a middle class that's able to spend $10 to $25 for a bottle, Wilson said.

Attorney James Zimmerman, partner of the international law firm Squire Sanders & Dempsey in Beijing, is advising the Temecula group.

In an e-mail, Zimmerman wrote that while Chinese consumers are becoming more sophisticated and the buying power of the middle class has increased in the past 10 years, there's a lot of competition from Chilean, Australian and other non-American wines.

"Very few California wines enjoy much brand recognition and retail shelf space, although many Chinese consumers that have traveled to California have developed preferences for California wines," he wrote.

"Distribution, storage, and climate control can be a challenge with few retail and hotel operations that truly understand the need to manage how best to maintain freshness."

The legal challenges of selling wine in China also are daunting, Zimmerman wrote.

"Working with a wine distributor may be helpful but most distributors represent a broad range of wines in the market and thus cannot and do not focus their efforts on a single brand," he wrote.

The trade mission might be better served looking for opportunities along China's east coast, where "the real wealth" is being made, said Joseph Meuse, who founded Belmont Partners, a firm based in northern Virginia that helps Chinese companies seeking to be listed on the U.S. stock exchange.

Katherine Whitman, an international business professor at Mount St. Mary's College in Los Angeles, agreed with Meuse.

Wine culture as Americans know it doesn't exist in China, she said. For example, she said Chinese who go clubbing see no problem mixing red wine with cola.

Meuse suggested the group bring along an American interpreter so nothing gets left out of the conversation. And be prepared to sit and talk, Meuse said.

"You have to have patience," he said. "One of our mottos in China is 'Don't run.' Slow down and let it develop."