Wine's new new world emerges: China

With Western winemakers setting up local wineries, China's Shandong Province is now one of the world's seven major grape coasts

The vineyard of Chinese winery Chateau Junding in Nava Valley in the city of Penglai, Shandong Province.

While Chinese domestic wine brands are trying everything to get attention from abroad, reputable international winemakers are on the opposite tack.

They are now establishing their own wineries in China -- moving one step beyond pure product export.

Top grape coasts
Among  several Chinese regions suitable for wine-making -- such as parts of Xinjiang, Gansu, Ningxia and northern China -- the city of Penglai (蓬莱) in Shandong Province has long been the favorite spot for international winemakers to set up local vineyards.

Penglai currently has 13 wineries, including Chateau Junding and Chateau Reifeng Auzias. More and more of them have sourced investment either directly from overseas winemakers or from Sino-foreign joint-ventures.

According to Beijing Business Today, Penglai is now one of the world's seven major grape coasts, rubbing shoulders with Médoc in France, Tuscany in Italy, Napa Valley in the United States, Casablanca in Chile, Barossa Valley in Australia and Cape Town in South Africa.

Lafite in Shandong
One of the latest overseas-invested wineries in Penglai is DBR Lafite, which has just set up its vineyard and started planting vines.

This is also the first winery the French brand has established in China.

Unlike its wineries in Argentina or Chile, the products from Lafite's Shandong winery will only be sold in China.

Lafite's export director Michel Négrier told Economic Observer that the China-made Lafite will hit the domestic market in two to three years.

"In roughly three years' time, Lafite's sale in China will be likely to tie with its U.S. market, and become the world's top one or top two," Négrier said.

However, Négrier didn't specify why the made-in-China Lafite will only go to the Chinese market.

China has surpassed Japan to become Lafite's biggest market in Asia.

A backgone industry
Penglai is known to most Chinese -- for its appearance in one of China's best-known legends -- as the starting point where eight tipsy immortals flew over sea with their magical weapons (八仙过海). It is one of the main tourist cities of Shandong Province.

In addition to tourism, Penglai's government has declared wine-making to be the city's "backbone industry for the century". The city's current plan is to build 30 high-end wineries in the next five years.

China is now the world's fifth largest market for red wine. According to a report released by China's leading investment consultancy Zero2IPO Research Center, China's wine consumption is expected to reach 828 million liters in 2011, and its per capita wine consumption will double in five years.

This means that by 2016 the Chinese market will consume more than 1.1 billion bottles of wine per year.