Calif winemakers work to crack Chinese market

By Tracie Cone

Associated Press

Published: Thursday, Feb. 16 2012 12:00 a.m. MST

California winemakers think the days of rice wine in China are waning as vintners find success marketing high-end cabernets to a new generation of upscale consumers.

Wine exports crushed international sales records in 2011, due in large part to growing demand for California wines in China and Hong Kong.

"We've been laying the groundwork for the better part of 10 years," said Terry Hall of Napa Valley Vintners, the region's trade association. "It's not like you just show up and start selling wine there."

Lower quality California appellation wines have sold well to middle-class consumers in recent years, but the increasing demand for top quality vintages is evidence of China's growing upper class.

"We try to be in all of the same places as all of the other important wines of the world and right now China is attracting so much attention," said Don Weaver of Napa Valley's Harlan Estates, where Bordeaux blends can sell for up to $1,000 a bottle on some wine lists and are double that in China. "Trying to solve the China puzzle is the most exciting part of my job right now."

U.S. wine exports to China grew by 42 percent last year, and similar increases were noted in other Asian nations, according to figures released Thursday by the Wine Institute in San Francisco. It nearly doubled 2010 export numbers as more winemakers are seeking to crack a relatively untapped market.

The industry effort to stand out from the French wines that have long been in China involves making a connection between potential buyers familiar with TV's "Bay Watch" and the Golden Gate Bridge to the California lifestyle.

"There's an association with wine and the western world," said Linsey Gallagher, director of international marketing. "It's seen as part of a luxurious lifestyle in other parts of the world. It's one of the aspirational products people look to as the quality of their lifestyles is improved."

Last summer the institute launched a marketing campaign to introduce California-made wines, including a virtual tasting. Wine and lifestyle writers in Shanghai talked to growers in San Francisco, who led them on guided tastings of select California wines that already were available in China. In November, a dozen members of the media came from China to tour wineries.

The Chinese economy has doubled in the past seven years, and low-end estimates say there are 1.5 million millionaires. With a population of 1 billion people in China, Gallagher figures only 18 million of them can afford fine wines.

"That sub-segment grows every year," Gallagher said. "The long-term opportunity is to get the rest of those billion people. We have our work cut out for us."

Grape wines still account for just 10 percent of the alcohol consumed in China. Part of the trick in marketing high-end wines in China is in educating palates, and helping Chinese growers produce better quality wines so consumers are not turned off by them, Gallagher said.

Chinese makers of plum and rice wines control 90 percent of the country's market, and consumers are used to improving the taste by mixing it with 7-Up or orange juice.

"We say, 'You don't have to do that with your Screaming Eagle,'" Gallagher said, referring to one of Napa's most sought-after wines.

While brand names are not familiar to most Chinese wine consumers, the Napa name resonates, said Hanson Li of the Hina Group, which has invested in a new Chinese winery and is looking to forge U.S.-Chinese relationships.

"Rewind 30 years ago and nobody in China had money," Li said. "Now it's moving so fast that it's hard to keep up with."

Vintners are working on getting wine beyond the high-end hotels that cater to westerners and into the stores and markets where locals shop.

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