The Asian giant’s economic boom has created a new thirst for wine

The journey from Shanghai’s airport to the centre of the city is the fastest train ride in the world. Passengers fly by paddy fields, factories and apartment blocks at dizzying speeds approaching 270 miles an hour. The train-levitating on a magnetic field-covers this 19-mile route in just eight minutes to deposit its riders in the middle of the largest city in the People’s Republic of China.

The ride is a fitting metaphor for the nation as a whole. In the past 27 years, China has experienced one of the most stunning economic expansions in history, ever since Deng Xiaoping began a tightly controlled transition to a more market-oriented economy. Anyone who wants to see the results need only walk through the neighborhoods of Shanghai's heart and take in the towering sky-scrapers of the Pudong district, the gleaming shops on Nanjing Road or the packed restaurants in the Xintiandi neighborhood.

"I find it astounding how sophisticated people in Shanghai have become," says Michelle Garnaut, the Australian owner of M on the Bund, a trendy European restaurant on Shanghai's historic Bund waterfront street. "They all look like they have walked out of a bloody Louis Vuitton shop; they have embraced all things Western."

With wealth and a new appreciation for food and drink growing in China's cities, it's not surprising that wine has quickly become one of the accoutrements so popular with newly affluent Chinese. Only a few years ago, most people in Shanghai slugged back grain alcohol while shouting, "Gambei!," and the most popular way to drink wine was to top off the glass with a healthy dose of Sprite. Now, young, wealthy Chinese are attending wine education seminars, holding Burgundy appreciation dinners at top restaurants and touring local wineries.

Grace Vineyard is located on a plateau in Shanxi province

The global wine industry has awoken to China's immense potential as a wine market. Importers and foreign wine producers who chose to invest early are now seeing solid growth, and new players are trying desperately to break into the "Middle Kingdom," as the Chinese call their nation.

And there's local competition. More than 400 Chinese wineries are now in business, all hoping to profit from the fact that the Chinese believe wine to be a healthy beverage and consider red a lucky color. Grapes from more than 100,000 acres of vines are being thrown into fermenting tanks, and the government estimates that wine production will grow at an average annual rate of 10 percent to 14 percent in the next three years.

"We lost money every year until 2000 because there wasn't really a market here," says David Henderson, president of importer Montrose Food & Wine. "Our growth in recent years has been spectacular. We are in a market that is not even close to its potential."
 
But winemakers, both foreign and Chinese, who are salivating over the prospect of 1.3 billion new customers, need to know that China comes with many challenges. Chinese winemaking is still in its early years, and importers face serious bureaucratic hurdles. The current potential market size for wine is estimated to be between 50 million and 250 million people. That's impressive, but doing business is not easy in this communist autocracy.

Will China develop a wine culture and become the next great market? The answer may depend on how well it can stay on track as it enters the 21st century, going 270 miles an hour.