China Goes Sideways(1)
Qingdao is best known as the birthplace of Tsingtao Beer, a relic of the German concession here and China's most famous brew. But recently the town fathers decided to diversify their tourist offerings, building the fancifully titled Qingdao International Wine Street. The boulevard, completed last year, boasts 19 stores selling imported vino, three hotels, and an 8,800-square-meter subterranean wine museum. What it doesn't have are tourists. A year after opening, the wine shops make a feeble profit selling discounted bottles for local Communist Party banquets. When I visited recently, a security guard at the museum whispered to me conspiratorially that he sees fewer than 20 guests a day.
The empty storefront in Qingdao doesn't seem to reconcile with China's booming thirst for putaojiu ("grape alcohol"). As the country's prosperous class grows -- Euromonitor International predicts the middle class will expand to 700 million people by 2020 -- Chinese consumption of wine is mushrooming. The country is already the seventh-largest wine market in the world and will pass number six, Argentina, by the end of 2010. Vintners worldwide have gloated over the Middle Kingdom's newfound taste during some of the worst years on record for the industry (worldwide wine sales dropped 3.6 percent by volume in 2009).
But a nation of uneducated drinkers who show little interest in learning about wine's subtler notes (exhibit A: the empty halls of the Qingdao museum) and rampant counterfeiting mean that China's nascent wine explosion may end up corked.
Wine has a long history in China, dating back the 2nd century B.C., when the imperial envoy Zhang Qian returned from Europe with China's first grape seedlings and wine-brewing know-how. But for two millennia, wine remained on the fringes of Chinese alcohol, giving wide berth to beer and baijiu, the ubiquitous (and rather foul) rice wine that can reach up to 120 proof.
Chinese consumers have given wine a second look over the last 15 years, as the middle class embraces status symbols and health-conscious drinkers look for alternatives to the traditional firewater. Chinese wine consumption increased by 29 percent in 2009, according to International Wine and Spirit Record. (Brazil, the next fastest-growing market, rose by only 10 percent.) And that growing interest has been a shot in the arm for foreign wineries from Bordeaux to South Africa's Breede River Valley to California's Bay Area. Chinese wine imports were $477 million over the first eight months of 2010, an 85 percent jump over the same period last year, according to Global Trade Information Services.
But many wineries are having a hard time getting a line on Chinese oenophiles. Wine drinkers can be broken down into those drinking imported and domestic wines. The import-drinkers are wealthy, label-conscious consumers, concentrated in the economic powerhouses of Shanghai, Beijing, and Guangzhou (and increasingly some second-tier cities as well), where wine from far-flung vineyards has "an aspirational place among middle-class consumers, the affluent, and super-affluent," said Edward Ragg, a Beijing-based wine consultant.
Chateau Lafite is the wine of choice for those with serious RMB to drop. Just as the American hip-hop community rescued French cognac from the brink in the last decade, the Chinese obsession with this French Bordeaux is sending prices through the roof: Last year, Chateau Lafite sold its 2008 Lafite Rothschild for €185 a bottle, but that price hit more than €1,000 on the resale market last month, according to the Wall Street Journal.
The reasons for Lafite's success are something of a mystery, but Jean Marc Porrot, a wine importer in Shanghai, argued that it is a combination of the label's early entry into China, French origin and its Chinese translation of "lafei," which is easy to pronounce.
"Eighty or 90 percent of the people who buy Lafite know nothing about wine," said Porrot, who himself thinks the label is overrated and has only tasted it twice in his life.
Unlike Sideways-inspired yuppies in America who have moved beyond merlot and white zinfandel, Chinese oenophiles aren't exactly invested in distinguishing varietals. Chinese drinkers rank actual quality as the fourth-most important factor when buying imported wine, after provenance, word of mouth, and information on the back label, according to a December 2009 poll conducted by Wine Intelligence, a London-based market research firm. "[Taste] will not be a factor as such, but the label and prestige of the bottle in question is key," Ragg said.
Chinese drinkers who stick with domestic labels are also upwardly mobile, either drinking wine to further middle-class aspirations or for health reasons, but few Westerners would even recognize the cheap, domestic vino they swill. Even the pretense of sophistication that imported drinkers may boast is gone. Much of this domestic wine ends up pounded at banquets amid shrieks of gan bei! (literally, "dry glass") alongside beer and rice wine, or else -- horror of horrors -- mixed with Sprite. With 86 percent of bottles in China selling for under $6, this end of the spectrum still makes up the majority of wine drinkers.
And the local vintage still has a ways to go. I purchased a bottle of local red for 12 RMB (about $1.80) whose label promised, "It is clarity and has full-bodied ruit-smell [sic], vinosity [sic] and long after taste." What I got was a bottle of strawberry juice that happened to be alcoholic -- perhaps not surprising, given Chinese drinkers' preference for fruity, sweet wines.
