The Chinese Nouveau Riche and WIne

[Richard Henderson]

The Washington Post featured an article today about young , newly rich Chinese people tasting American wines blind in a competition . This group had a tasting club and had tasting teams that meet regulalry to learn about wine . They pointed out that the really rich Chinese are a tiny minority but the gist of the article is that they have money and will be affecting wine markets. We had a thread go a little jingoistic a month or so ago. I certainly don't intend that but if these Chinese folks discover port, the market will go up. I say bravo to them and to port producers if they can expand their market but I will lament it when prices take off.

If some one better skilled than me can find that article and post a link, it is a fascinating read.

[Tom Archer]

As someone who knows China quite well, I am a little sceptical..

The Chinese, believe it or not, are actually quite good wine makers themselves (although the export products are rubbish)

..AND (this may surprise!) they are every bit as proud to be Chinese as the Americans are to be American..

Those who look to China to support the ludicrous prices of Bordeaux are probably guilty of a little wishful thinking..

Tom

[tastingnote]

I was speaking to a rep today about this exact thing! Ten years ago, his company used to do (approx) £4million p.a. with the UK en primeur Bordeaux market, and now they do less than £1million. However, his sales to China, Japan and Singapore are now £8million p.a. In my humble view, the far eastern market is definately having an influence over prices, because there is no way that 2005 Bordeaux prices could have stayed so high unless someone was buying them, and it certainly wasn't the UK trade!

Although it was before my time in the trade, didn't the price of Vintage Port in the UK start climbing when the American market started buying it in the 1990's? I have heard stories of pre war ports going for very little money in the early 1990's. And if that's true, shouldn't we prepare ourselves for the same again if/when the far eastern market port takes off?

Peter

[Frederick Blais]

The Asians are coming strong in the market for wines. Even if only 1% of the population would drink wine, that's already quite a few millions of them!

Having gone trough many readings, especially in Decanter magazine recently, the Asians are strong buyers of high quality wines. The local market do not hold a lot of them, they mainly sell their own country's wine. With new economy rising in these countries, cities like Shangai, Macau, Singapour are the market buying the most Grand Cru from Burgundy and Bordeaux from the new releases. There is so much people having money out there that they are just drinking the hype wines, there is no market in Asia for lesser wines from foreign countries.

[Derek T.]

A "small minority" in a country of 1.3 Billion people is a force to be reckoned with

The UK and USA combined are around one quarter the size of China alone, never mind the rest of Asia. If these guys develop a taste for premium styles of port we all need to find something else to drink - or move to Bejing :?

Derek

[Tom Archer]

Bear in mind that the Japanese have been flush with cash for more than a generation now, and have a population that is double that of the UK - one tenth that of China - 2% of the world's total.

- so if Asia was going to become a big price driver for top european wines, one would expect to see strong demand in Japan already.

According to the IVDP, the Japanese only take 0.4% of port production (by value) and the vast majority of that is non-premium. Last year, some VP was shipped back from Japan and sold at Christies in London - they must have been desperate to find a buyer to do that!

So, why would one expect China to go where Japan hasn't?

Tom

[Frederick Blais]

I'm not keen with tradition in Asians country but I can certify you that China is a strong buyer. You could read in many magazines and web site about the Bordeaux 2005 primeur. If you don't buy it, China and Russia will do. People where worried about losing allocation to these countries if they would stop buying one vintage.

Now will they get into Vintage Port...? Not until Wine Spectator or Robert Parker rate a few 100 pts IMHO. These new wine addicted countries seem to buy only what is hot and highly hype and unfortunately(fortunately for us) Port is not really hot right now.

2nd Thought, if established Port markets are enough to supply the demand, there is no need then for Port producer to try to establish new markets.

[Jay Powers]

At the prices for 2005 Bordeaux, the Chinese or anyone else are welcome to them. I'm sure that the 2005 are great, but even with Bordeaux being my most favorite of all dry red wine, I'll stick to the 2004 for the value in futures.

I would also think that Japan is a much bigger market for dry red or port than China, which although an economic powerhouse in terms of growth % year over year, cannot compare on the high end luxury market with Japan in total dollars (or pounds or Euros) spent on wine.

Jay

[Roy Hersh]

- so if Asia was going to become a big price driver for top european wines, one would expect to see strong demand in Japan already.

According to the IVDP, the Japanese only take 0.4% of port production (by value) and the vast majority of that is non-premium. Last year, some VP was shipped back from Japan and sold at Christies in London - they must have been desperate to find a buyer to do that!

So, why would one expect China to go where Japan hasn't?

I'd love to see the numbers on Japan's procurement of Bdx and Burgs!

[Derek T.]

Now will they get into Vintage Port...? Not until Wine Spectator or Robert Parker rate a few 100 pts IMHO.

-
I'd love to see the numbers on Japan's procurement of Bdx and Burgs!

I'd love to see Parker rating some rice wine at 100 points to keep the Japanese and Chinese away from our port

Derek

[Tom Archer]

The notion of the Chinese poring over RP's ratings makes me smile - can you imagine anyone trying to translate his flowery verbiage into Mandarin?

- I'm flying to Shanghai tonight - I'll report from the front line..

Tom

[Al B.]

Its intresting to note in the context of this discussion that Berry Brothers have offices in Hong Kong and in Shanghai.

(Tom - BB&R Shanghai are on 021 5230 3063)

The last price list on their website was April 2006 when the only port listed was Berry's Finest Reserve for 207 RMB per bottle ($26.60 approx.).

Alex

[Tom Archer]

Well, judging by the post that's just appeared in the main forum, I suspect that someone's been googling 'wine' and 'china'.

Anyone looking at the stats on that link should know that China includes spirits in their official definition of 'wine'.

Well, one long day, a quick look at the offerings in the airport shops, and two nouveau's quizzed over dinner this evening (we all drank beer)

Of those, one knew that France made Champagne and Cognac, but didn't know they made anything else, and the other knew that France was a big wine producing country, but had never seen a bottle - and didn't seem particularly interested. I didn't bother to explain what Port was...

Airport shops in China are laden with Cognac and Whisky, and a little Champagne. The only table wines were home grown.

Bangkok's new international airport (nothing like as bad as some are making it out to be) had a full range of Penfolds in one of its shops - including Grange - but no price tags...

Doing this post on a hotel computer that has a Chinese version of Windows 98 on it - all the menus and dialogues come up in Chinese, which requires some inspired guesswork...

Tom

[Julian D. A. Wiseman]

As China becomes richer the Chinese will make more luxury products of their own, in keeping with Chinese taste and history. Yes, they will want some VP. But we might even want some of their best agricultural products.

[Tom Archer]

Well, I spent far too much time (on what was a whistlestop visit) trying to get a take on this one, and spent a long time discussing it with one of my oldest contacts in China - a tiny but formidable lady, who has travelled widely.

Yes, the Chinese drink red wine, and yes it is getting more popular, especially with middle class women (- sound familiar?) But it is nothing like as widely drunk as it is in the west.

Of all the people in China, the majority will probably never buy a bottle, and of those, the great majority will be satisified with the domestic product, unless imports are significantly cheaper.

So, the total number of Chinese who are ever likely to buy an imported bottle is probably no more than 5-10% of the total.

And of those that do buy an import, what will they choose?

The wine market in China is very similar to the spirits market in the west, in that it is primarily driven by marketing and presentation.

There are also differences between the asian palate and the caucasian - they can never quite understand our love of coffee, and anyone who has sampled their domestic spirits will be familiar with the 'sweaty socks' bouquet - that they seem totally unconcerened about..

In the interests of research, I sent one of my agent's office girls on a shopping trip. This was in the town of Jianhu (pop. 600k) mid way between Shanghai and Beijing, and about as close to 'middle China' as you could hope to find.

I asked her to go to the biggest supermarket in town, and ask for the two best-selling Chinese reds.

She returned with an entry-level Changyu (some of their wine is very good) and a similar Great Wall.

We tried them over dinner. Both were filtered to death, and horribly bland.

Does the asian aversion to coffee also extend to tannin? The Thai wife of a friend here is an enthusiastic red wine drinker, but she was unimpressed by an Australian Cab that had (to my mind) an excellent bite to it.

I personally can't see an odd scoring system from an American lawyer impressing or driving this market, nor can I see them readily signing up to the notion that 'French is best'.

But I can see an adventurous Australian winery developing wines that suit the asian palate, and then presenting them in twee little boxes, backed up by loads of POS material and TV ads.

But will they ultimately make a profit?

Personally, I wouldn't invest..

Tom

[Moses Botbol]

Does Hong Kong have much of a port culture? I know they have a solid Cuban Cigar culture...

I saw an article that polled what Chinese thought were the biggest status symbols and for watches; Vacheron was number one. Seems like they do have taste at picking status symbols...

[Claus R]

Looking back at older posts I stubled across this and feel I need to leave a comment...

As I'v mentioned before, I been involved with whisky for a good decade now. I'm heading one of the largest whisky clubs in Denmark and travelling to Scotland on a regular basis to meet people in the industry and what I've seen and heard in the whisky business is down right scary and hope it doesn't happen to Port as well. Although I'm sure the producers both in Scotland and Portugal will be happy...

Us -the consumers of whisky- has seen the prices go up by as much as 60-70% on most brands over the last 5 years.
Prices on collectors bottles has since a rise of several 100%'s and some has reaches the ridicoulous level long ago (read: The Scion Port is cheapo compared)

This is a direct result of new global market with player like China, Russia, India and Brazil getting the taste for whisky and the big drink companies like Diageo selling their stuff at entry level prices in e.g. China to get people hooked...and in doing that, there's only the rest of us in the western hemisphere left to pay the bill upping our prices.

Now the scary stories - they mix everything with coke 'cause they really don't like the wine!! I have a friend who visited Shanghai a little while back and at this nouveau Riche place in downtown Shanghai, he watched in horror a group of young chinese mixing a Chateau Lafite 1970 with coke !!
In Thailand I've heard of a group of Russians mixing a Macallan Malt from 1955 with coke!

If this is where we're headed, then...

Anyway, this was whisky... but I'm sure Port can turn the same way

Regards,
Claus

[Julian D. A. Wiseman]

The British taste in beer used to be, and still largely is, that which we call “bitter”. Good stuff too.

Most American taste in beer isn’t in anything deserving the ancient name of “beer”. Then there are the American micro-breweries, which have many beers which are far too sweet for me, with a side-order of some ludicrously over-hopped things.

OK, tastes differ. Surely the British and Chinese tastes in wine can differ as much as the British and US tastes in beer?

[Eric Menchen]

Sounds like the real money to be made in China is by making Coke, and raising the price.

As for beer, there is a great appreciation for English style bitter, Scottish ales, etc. in the United States, albeit from a small minority. Craft beer in the US is a small part of the beer market (in 2009, 4.3% by volume and 6.9% by cost), and the UK styles occupy just a small segment of that market. And I will admit that in the craft beer market, the trend is to more hoppy styles and more funky styles these days.

[Derek T.]

Sounds like the real money to be made in China is by making Coke, and raising the price.

I think you'll find us Brits have indulged in that trade in the far east before and it didn't turn out too well. Perhaps because we were flogging Opium instead of Coke?