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China's set to acquire "New World Wine" label
www.financialexpress.com by 2005-09-05   

It is the latest "must-have¡± item for upwardly mobile Chinese "a bottle of wine on the table. Viewed as the ultimate symbol of sophistication, the noveau riche are scrambling to acquire the right vintage. Consider the following statistic as a measure of the growth of China's wine market in recent years: the per capita consumption of wine has doubled in the last five years. Even so, the average per capita consumption is a meagre 0.3 litres a year. By comparison, an average American consumes 12 litres of wine per annum and a Frenchman a staggering 59 litres. So there is plenty of room for China to grow and international and domestic wine makers are scrambling to fuel a future boom.
 
Traditionally, China has favoured beer and baijiu, an alcohol made from grain. But health concerns about hard liquor and possible grain shortages gave rise to a government campaign to switch to wine' one that included using wine as the alcohol of choice in the ubiquitous Communist party toasts. Initially, imports satisfied the nascent Chinese demand for grape wine. But over the last decade, several local vineyards have sprung up across the country. Production has been increasing steadily with a 15% rise in 2004, with a host of grapes ranging from merlots to cabernet sauvignons being grown.

 

The first vineyards that sprung up were along the north-eastern coast of China, not very far from Beijing. Dynasty winery in Tianjin province and Great Wall in Hebei province are among the two better known ones. Shandong province "midway between Beijing and Shanghai " is considered the best white wine region. However, the area generating the most buzz is along the old Silk Route and 5,000 kilometres inland. Many believe the provinces of Xinjiang, Ningxia and Gansu with its continental weather has tremendous potential.

 

Xinjiang, which borders Kazakhstan in Central Asia, is three times the size of France in addition to being the most inland region on earth. It is renowned for its high quality fruits and vegetables and is hoping to meet with the same success when it comes to wines. With government backing, Suntime winery has planted 10,000 hectares of grapes. The current focus is still producing and selling mass market wines but many are hopeful it will become a more upmarket label in the future.

 

China¡¯s most ambitious project is its Icewine tourism centre located in Liaoning province, 100 km from the border with North Korea. Icewine is late harvest wine made from grapes pressed while they are still frozen, and it is rapidly emerging as China's latest luxury drink. Selling at close to $100 per bottle in Beijing restaurants, it is rivalling XO Cognac in status. It may sound as if what wine to grow where in the Chinese context is a hit or miss proposition "but that is not entirely true. "

 

The more professional companies have hired global wine experts to advise them on how to produce a classic vintage. This, in turn, has helped attract foreign investment. Wine companies from Spain, Italy and Bordeaux, France have taken stakes in local vineyards. And, in recent years, investors from Singapore and Hong Kong have also joined the fray. Hong Kong-based tycoon CK Chan has put in $10 million in Grace Vineyard "one of the more promising of the bunch. "

 

Overall, there are 400 registered wineries across the six major wine-growing reasons. But a handful of players, namely, China Great Wall Wine, Dynasty, Castel-Changyu and now Suntime control half of the market. But changing the mindset from mass market to niche is proving to be challenge. Most of the makers tend to focus on producing large volumes at lower costs rather than on quality. Those that have a competent team of foreign consultants like Bodega Lanes and Grace have grasped this difference "others continue to struggle. "


And then there is the perennial Chinese problem of fakes. Slipshod labelling laws have resulted in three year-old wines masquerading as 13 year-old classics. Also, disguising cheap imported wines as domestic produce has hit the reputation of local wines. If these problems persist it could severely damage the long-term reputation of Chinese wines.

 

China has thrown its hat in the ring to become part of the growing breed of new world wines. But it is trying to achieve in a few years what other countries have attained in decades. Not an entirely impossible task given the country's track record "but as is required when growing delicate grapes, patience, careful nurturing and a proper market environment will be necessary to realise this dream."

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