What are the chances of "Asian Wine Explosion"

[Serge Birbrair]

I see some people posting from Asia and I am curious,
from your perspective,
what are the chances of Asian countries becoming major importers of wine?

Traveling thru Singapore, Thailand, Malaysia,
I haven't noticed locals drinking wine,
seems like beer was a drink of choice.

If China developes the taste for wine,
it could solve the world wine glut problem.

[Chinois]

Asian countries becoming major exporters of wine?

Importers?

[Serge Birbrair]

Asian countries becoming major exporters of wine?

Importers?

thanks for correction,
I can't think straight at 3 am in the morning

[Chinois]

At 3am you shouldn't be worrying about wine glut.
Sweet dreams, isomaniac

[Red Bigot]

Serge, do you mean exporters or importers?

I can't speak for the other countries, but there is a blossoming wine-drinking "class" in Thailand, but prices are prohibitive. There is some small hope that the Aus-Thai FTA may help make Australian wines cheaper there.

After long experimentation in Australia and Thailand I've found that Australian Shiaraz (and Durif) that is fruity without over-bearing oak/tannins is a superb much for much Thai food. Last trip (August 2004) we found Dalwhinnie Shiraz 96, Greenock Ck Seven-Acre (94), Yering Station Shiraz/Viognier 2002, Noons Reserve Shiraz 98 and 2002 all went well with the non-tourist food, Kasler Bogan 2002 didn't go so well, a bit oaky I think. The surprise standout match was the Warrabilla Parola's Durif 2002, our Thai friends jaws dropped in amazement when they tried this wine with some southern Thai curries sourced from the markets in Surat Thani, I've had to put away one for their visit here later this year.

There are a couple of supposedly almost reasonable Thai wineries in the northern highlands, but the locals leave the bottles of wine sitting in the sun at roadside food stalls, so I wasn't game to try. I don't think there is much danger of vast exports any time soon.

I read somewhere recenty about the area under vines and wine production in China, I can't remember the figures, but they impressed me as being quite large.

The Global Wine Encyclopedia notes Chinese vineyards cover 500,000 acres (200,000 hectares) in approx 2000, about 40,000 ha more than Australia in 2003. But I guess they have about 100 times the population.

Some of the Australian wine retailers do quite a trade with Singapore and Malaysia and who knows where else in Asia, there are quite a few vistors/posters here and other forums from Singapore and Malaysia, so I guess as prosperity increases, wine consumption will also increase, it just seems to happen that way. China (and perhaps northern India?) would have enough land with the right climate for growing premium grapes, who knows what might happen.

[Mark G]

China (and perhaps northern India?) would have enough land with the right climate for growing premium grapes, who knows what might happen.

I'd be extremely surprised if this was the case, the area covered by a mediteranean climate in either country is miniscule at best. I believe they'll be able to grow grapes to make wine but they'll be for an extremely low level market and use grapes that aren't noble so as to ensure enough volume.

Both countries will be the biggest market for wine in 10-15 years but do not expect there to be a rush on premium wines from the world (apart from the uber-premiums where they're used for prestige rather than any vinuous knowledge). The yellowtail's of the world will find this market a challenging but extremely rewarding one over the medium term - small to mid level producers will not access this market without a target in mind. If they go out and try to meet that target then they will risk losing control of certain aspects of their operation and this may or may not be welcomed.

My $0.02.

Cheers

Mark G

[Red Bigot]

I'm not big on geography Mark, but there appears to be a fair area of China between Shanghai and Beijing that would suit grape growing. What proportion of any country's wine is premium, noble, etc anyway? Most drinkers seem to start with sweetish whites or "2-buck Chuck" or yellowtail type wines. I gather the good publicity of the possible health effects of red wine is having an impact in some Asian countries.

As at Dec 2004: "The Chinese authorities' commitment to agricultural expansion is a key priority in the development of the country's economy. Ranking 6th in the world with production of approximately 10.8 million hectolitres,* 359,000 hectares (an 18% increase between 2000 and 2001) and 500 to 600 wineries, the viticulture and winemaking market in China has a huge development potential. Wine consumption, still low at 10.9 million hectolitres, should substantially increase as a result of the promotion of wines produced by controlled fermentation. *(Source: OIV)."

[Festival]

I'm sure that Jaime can elaborate more, so here's my take on things in Hong Kong.

There are a few reasons why retail mid tier/premium wines sells are stagnant in HK.

- 80pc wine duty
- Private wine clubs which get their own import license and ship large quantities to cut costs by bypassing the retailer.

This issue was featured in today's (07.03.05) South China Morning Post. http://www.scmp.com/ have a look at the editors pick. (requires an account)

There have been a number of recent wine share issues on the Honk Kong exchange. One of them the Dynasty Fine Wines Group in China was more than 600 times oversubscribed as it listed on the Hong Kong exchange in
January. Dynasty is a joint venture between Remy Cointreau and Tianjin
Development Holdings Ltd. It is already up 400pc since being listed.

Dynasty appear to be focussed on local consumption.

I've seen a trend in the HK supermarkets from a few years ago. You can no longer buy the mid-tier/premium wines in the local supermarket. The top Aussie wine available at the non-gourmet supermarket is normally Wynns Coonawarra Cabernet Sauvigion or Bin 128.

The upmarket supermarkets do have a wide selection, but most of the times the wines are over priced. Occassionally they have specials where you can find Clonakilla Shiraz Viognier for AUS$45.

The Hong Kong public seem prepared to invest in the Chinese wine industry, which should push things along at a great pace.

[Serge Birbrair]

RB,
of course I meant IMPORT. China was a sleeping giant, and when this giant has awaken,
we all saw what happened with oil prices. It will be interesting to see if 1 billions Chinese develope the "sweet tooth" for wine,
this alone would being back the balance of supply and demand.

[Serge Birbrair]

At 3am you shouldn't be worrying about wine glut.
Sweet dreams, isomaniac

I am an insomniac because of ...Australians! One of my biggest business associate for many years was Scott Phillips from Brisbane
and the best time to catch up with him was 4 am. I wake up early since 1996, fortunatelly, I learned over the years how to get back to bed at 5 am

[Mark G]

I'm not big on geography Mark, but there appears to be a fair area of China between Shanghai and Beijing that would suit grape growing. What proportion of any country's wine is premium, noble, etc anyway? ...

Vines are extremely hardy plants and down here in MR they are treated as weeds! Yes there will be large areas of China that would (and does) support grape growing, however, the ability to produce fine wine from vitus vinifera vines will be extremely difficult due to their continental climate. The closest example to chinese regions would be the NY finger lakes region of USA and the canadian industry near the great lakes - both areas have a continental climate, but importantly both areas have their temperatures moderated (slightly!) by large bodies of water.

Hence my comment that they can't really aim for a premium wine from their plantings. The major plantings most probably would be american vine varieties as they'll handle the winter temps and erratic rain fall and still produce a crop. Wine and China / India is an enigma as the media and commentators assume wealth and lifestyle improvements leads to the "cultural" intake of wine - this may be right but I have reservations that this will be the wine "glut" solution, unless the world has a major glut at $1 per litre.

Cheers

Mark G

[Adam]

Hence my comment that they can't really aim for a premium wine from their plantings.

I spoke about this in detail with a number of guys from Mondavi who were investigating this a few years ago, and in their opinion, with the right technology, disciplines, and time, China can produce world class wines....and whats more, they can charge what ever they want for it because the chinese consumer is so nationalistic.

[Guest]

During the late 19th Century there were quite a few wineries in China. Mainly run by Europeans, and/or Chinese diplomats who had spent time in Europe. I have seen a label from one that was on the Shantung Peninsula - dated in the 1930s if I recall. Much of the Shantung Peninsula having been a German Protectorate/Concession Area .

[Serge Birbrair]

Hence my comment that they can't really aim for a premium wine from their plantings.

I spoke about this in detail with a number of guys from Mondavi who were investigating this a few years ago, and in their opinion, with the right technology, disciplines, and time, China can produce world class wines....and whats more, they can charge what ever they want for it because the chinese consumer is so nationalistic.

I wouldn't discount Mondavis...they brought the wine revolution to Chilie

[Bob]

In the absence of some inspired marketing, I would'nt count on any further growth in Japan, at least not in the next 5-10 years. The high-end market is pretty much saturated, and the low-end market it very fickle. Drinking cheap French wine at wine bars was a fad for a while, but it has faded; no telling if it will die completely (more likely) or have a revival (less likely), but in any case it was mostly crap that wholesales in France at less than A$1 a bottle. No one seems interested in investing heavy advertising funds in creating a mid-level market. Drinking wine at home is VERY rare. Restaurant markups are as bad as the US; at least double for high-end wines, as much as 500% for low-end wines vs. local discount retail.

[Mark G]

Hence my comment that they can't really aim for a premium wine from their plantings.

I spoke about this in detail with a number of guys from Mondavi who were investigating this a few years ago, and in their opinion, with the right technology, disciplines, and time, China can produce world class wines....and whats more, they can charge what ever they want for it because the chinese consumer is so nationalistic.

Adam (this sounds so formal!)

I suppose you could change out "can't really aim for a premium wine ..." to "could but only if you had squillions of dollars and were prepared to deal with the chinese, then you could aim for a premium wine ...". China isn't a natural setting for grape growing, and to make premium wine there is really just a shot at profit, rather than at fine wine.

Mondavi's may have "found" Chile but we're all still waiting for that top end plonk to roll on out, and this is with a climate that half pie imitates europe.

To guest, nearly everywhere europeans landed they planted some vines, from Busby onwards it was a european obsession. It would be hard to know if the wine made was half decent or even what varieties they cracked on to. Grapes can be grown anywhere (well nearly, I am discounting the poles), but to make fine wine it is a combination of very finely balanced climatic and location conditions that are critical - whether China or India have these plots is anyones guess but right now looking at the pre-greenhouse map of the world's climate it is not looking good.

Cheers

Mark G

[JamieBahrain]

Just some notes in point form of my experiences in Hong Kong ( resident ), China ( two nights a week ) & frolics in Asia.

1)- Tax and duty on wine is expensive. But bargains can still be had in competitive economies such as HK ( Festival's mention of $45 Clonakilla in Hong Kong ).

2) Currency shifts have created bargains but a glut will come about when retailers restock with Australian/NZ/European wines. And despite a record low US dollar -surprise, surprise - there is still little value coming out of America.

3) There are thousands and thousands of premium bottles of wine- old & new world - are cooking on retail shelves in Asia. Whether it be the extreme heat of the tropics or the extreme temperature variations of Northern China ( Beijing is -10 in winter to 40 in summer with no shop airconditioning ). When Asian retailers realise their vast but slow moving stocks are spoilt I doubt whether they will restock.

So, I suggest there is already an over investment and expectation of premium wine in Asia-especially China. I must add Peter Lehmann wines move well in Beijing. Probably expat driven.

4) Intellectual property rights are questionable in China. I would suggest you would be foolish to purchase super premium wines in this market.

5) Wine fraud is acceptable business in China. Wine from Chile, with additional local contributions, from the current vintage, is bottled and marketed as vintage 1993 Great Wall Cabernet Sauvignon! With spray on dust for aging effect.

6) Chemicals - DDT? - banned by Western nations are still used by Chinese farmers. I have read that this is why Chinese wine is banned from being imported to some countries.

7) Asian Duty Free can be a bargain! St Henri shiraz $38 a bottle my current buy. Dom $150 etc. This will probably not occur at large airports but the smaller airports with low rents. Trouble being storage conditions dubious.

POLLUTION. You want to buy Chinese wine? Chemicals, chemicals, chemicals and the pollution and environment abuse to be seen to be believed. It is apocalyptic! I traverse the land mass weekly, the choking industrial haze is a concern. I will post photos of the skies around Tianjin ( grape growing region ) and see if you would buy wine - or any produce for that matter - from China. Wine demand has to be local.

9) Quality control of Asian winegrowing. Bought my wife a dozen red roses for valentines day. I was in the flower growing region of Kunming. My wife put her nose in the flowers and smelt urine! Cheap way to fertilise the roses but not endearing quality control.

10) Food/wine matches are difficult. I aggree with RB that shiraz a good match - although I would go the lower end. Rose from the new world too sweet with spice and Alsace hit and miss ( traditonal food/wine matches ).

Someone who can produce cheap red that matches well with Asian foods and markets as such, will do well in the region.

[Serge Birbrair]

Jamie,
that was one heck of an eye witness acount,
thank you! Notes like that one could never get of CNN...I appreciate your insight remendously!