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The China Mirage?

2011 November 11
by Mike

A splashy wine conference took place earlier this week in Hong Kong. WineFuture, as it was called, brought together a bunch of big-name wine mavens for several days of talking, tasting, and schmoozing. Judging by the reaction on Twitter, the event was something of a bust, although it did yield a priceless quote. Pancho Campo, WineFuture’s organizer and head of The Wine Academy of Spain, admitted to wine writer Rebecca Gibb that the panel discussions had been less than scintillating and said, “One of the problems the [wine] industry has is we have great minds but terrible speakers.” Give the man points for candor. If WineFuture is never held again, I suppose Campo’s remark can serve as its epitaph.

Presumably, Hong Kong was chosen as the venue for WineFuture because it is the gateway to China and China is seen as the Promised Land by the global wine industry. It seems that every wine region in the world is now staking its hopes on China. At a wine fair that was held in Hong Kong several days before Campo’s pow-wow, there were exhibitors not only from wine-producing colossi like France, Italy, Australia, and Spain, but from places like Israel, Georgia, Latvia, and Malta. The fixation with China is understandable: with the United States still suffering through a housing and unemployment crisis and Europe seemingly on the brink of economic Armageddon, fast-growing China looms as a potential savior.

Wine producers are hardly the first foreign merchants to be seduced by China; in fact, the wine industry has been fairly slow to succumb to sino-euphoria. I lived in Hong Kong in the mid-1990s, a time when Western multinationals were making their initial push into China, and the city was crawling with starry-eyed Americans and Europeans en route to and from Beijing, Shanghai, and other mainland cities. Everyone was cutting deals, and salivating over the prospect of reaching a billion consumers. An American business consultant who resided in Hong Kong had a great term to describe the giddy optimism that propelled this particular gold rush. He called it the “two aspirin theory of China”—if you could sell two aspirin to every man, woman, and child in China, you could mint a fortune. Substitute two bottles of wine for the two aspirin (and cut the kids out of the equation, of course), and you understand why all these winemakers are now panting so heavily about China.

Realistically, though, how much cabernet, pinot noir, and syrah can China absorb? Yes, there have been some record-setting auctions in Hong Kong, but these sales have revolved around a tiny number of venerated labels—Lafite, Latour, etc. Bordeaux apparently enjoys enough cachet among Chinese grape nuts that less prestigious clarets are selling well, too, and Burgundy also seems to be attracting some interest now (I clenched my teeth while typing that last part). The Australians have been furiously working the China market in recent years, and their efforts seem to be paying off. It doesn’t appear that California wines have made inroads yet. I recently spoke with Charles Banks, the former owner of Screaming Eagle, the ne plus ultra of Napa cult cabernets, and he was skeptical about the California wine industry’s prospects in China. “Anybody in California who thinks that China will be their salvation is living in a dream world,” he said. If that’s true for wines from marquee regions such as Napa and Sonoma, then surely it is true for wines from more obscure places.

Last week, I posted an item about the controversy surrounding Wine Advocate contributor Jay Miller’s pending trip to the Murcia region of Spain, a visit that has now apparently been canceled or at least postponed.  To me, the most pathetic aspect of Murciagate, as it has been jokingly dubbed, was that Miller and Pancho Campo, who was organizing his visit (busy guy), were scheduled to host a seminar at which they were going to give local vintners tips on how to crack the US and Asian markets, advice that was presumably going to garner both men hefty speaking fees. Perhaps Miller has some wisdom to impart about the American market—he was a retailer—but what does Campo know about selling wine in China? Has ever done it? And what’s the likelihood that any of the producers attending this “strategy session” would be able to cultivate a following for their wines in China? The seminar struck me as an exercise in wishful thinking.

And, of course, all of the optimism about China is predicated on the assumption that the country’s economic surge is going to continue unabated. But that may not be the case. A report released Tuesday by the Conference Board predicted that China is going to see sharply decelerating growth over the next decade. By 2017, the group says, China’s annual growth will be down to just 3.5 percent and will remain in the low single digits for some years thereafter. Obviously, long-range projections of this sort often don’t pan out, but if the Conference Board is correct, the implications are profound. China’s political stability depends on sustained rapid growth; if the boom times end, social unrest could well follow. And if the economy slows as dramatically as the Conference Board believes it will, this will inevitably hinder the spread of oenophilia. There is no denying that China is a promising market, but all these hard-up wine producers and wine regions that see it as a potential lifeline amid the current global economic turmoil are surely deluding themselves. To borrow from Keynes, the Chinese market can remain embryonic longer than they can remain solvent.

12 Responses leave one →
  1. October 9, 2014

    There’s certainly a great deal tto find out abvout this subject.

    I really like all the pooints you’ve made.

  2. September 13, 2014

    I’m truly enjoying the design and layout of your
    site. It’s a very easy on the eyes which makes it much more
    pleasant for me to come here and visit more often. Did you hire out
    a developer to create your theme? Great work!

  3. November 15, 2011

    I personally think the Chinese market will grow, maybe not as much as some predicted 5 years ago, but still worth doing business with.

  4. November 14, 2011

    Hi Mike,

    I wouldn’t say that there was very little value. There were quite a few speakers there that were genuinely hoping for a good exchange of information and views. Parker’s tasting was really good and turned my mindset around given the love him or hate him reputation he seems to have. Jancis was from what I heard also surprised not to see more integration with local professionals. The Summer Gate guys were very informative and so was Don St. Pierre from ASC. Francis Ford Coppola, in my opinion, reminded us listeners that wine is at the end of the day about the drinking and eating and sharing.

    Everyone was thanking Pancho for bringing together such a list of people. And the fact that all showed up: is that just fees or a partial interest in exchanging information? I think there’s an opportunity here. Mike, you should organize something. You’ve got the right head and attitude.

    Best, Mandy

  5. November 14, 2011

    Mandy, Thanks for stopping by and for the comments. It’s great to hear from someone who was there. My impression is that Wine Future was an excellent source of fat speaking fees for certain wine personalities, but judging by what you saw and what others have reported, it doesn’t seem to have had much value for the people attending. I’m sorry to hear there was an air of condescension to the discussions. As we’ve talked about before, condescension regarding Chinese wine drinkers has been a constant problem going back some two decades. The stuff about Pancho bellowing at the audience is pretty appalling, but not entirely surprising. I think it all boils down to this: do you see China as a market to be exploited, or as a market to be cultivated and explored? Are you there to lecture or to listen? From the sounds it, Pancho gave his answer.

    Jim, thanks for stopping by, as well, and for the link to the write-up about the Grape Wall tasting. In terms of developing China’s wine culture, I suspect an event like that has far greater value than something like Wine Future. I’m due for a trip back to Beijing; it’s a city that mesmerized me when I first visited it.

    Thanks, Rancho Pancho, for the comments regarding MWs. Very interesting. I think you know my views on that subject :)

  6. Rancho Poncho permalink
    November 14, 2011

    Mandy,

    Pancho is an MASTER of Wine. Why would he listen? He already knows everything.

    This ability to talk about wine mostly through second hand experience is quite recurrent among MWs in my experience. They are a limited number to have ever made wine, yet rarely refrain from giving winemaking advice and rarely fail to explain exactly what was not done right in terms of winemaking. Remarkable.

  7. November 13, 2011

    Hi Mike and all,

    This is all fascinating context to read. Being a merchant here in Hong Kong and having attended that week’s affairs – the HK Wine and Dine, HK International Wine and Spirits Fair, Acker’s auctions, Wine Future and our own involvement with helping sell tickets to a Parker Event organized by a Singaporean group I was amazed with the activity that is here. Wine Future was really interesting but more so because it was such a show of personalities. I haven’t been in the wine trade forever so seeing all these vocal big personas that I read about in action was eye opening. I kept asking myself where all the local professionals were. Some of us were there but there was very little effort to integrate them and I think the ticket price was too high to really involve all the smaller merchants. At one panel about education, Pancho Campo was screaming at the crowd about ‘How do we get them *into* the store?’ suggesting that us in the wine trade need to herd our customers. I thought it was crass. Wine is a hedonistic and intellectual pursuit – we’re not selling soft drinks. I thought those that did speak that were from Hong Kong/China said a few points that need to be heard more: China’s wine consumers need time, they need to find their own palate and they won’t spend money just for the sake of spending it. This is an exciting market that will quickly reveal itself but ‘quickly’ has to be set into the context of years. One person said China will take 10 as opposed to US’s 40 to come to a similar maturity and I whole heartedly agree. But in the meantime, it would be more prudent for those who are looking for experts on China to ask the local experts and ask not one but many to get a clear picture. At Wine Future, Pancho did a lot of talking and one person suggested he was being condescending — I personally thought he didn’t do enough asking and listening.

  8. November 13, 2011

    Your historical context is essential here. There isn’t a week that goes by without someone writing about how the China wine market is emerging as a “Promised Land”, when, as you note, we have seen wine industry people seek their riches here for decades, not to mention over a decade of strong steady growth in wine imports — though I would note that imports are not the same as sales.

    I’ve lived in Beijing more than seven years and have met lots of wine industry people who made their first trip here, or to wine-producing regions such as Xinjiang or Shandong or even Ningxia, in the 1990s. Claiming interest in China’s wine scene is new is something like saying China’s economy is starting to “boom” — both have been happening for decades. In any case, that won’t stop some people who make a trip to Hong Kong, try some dim sum, and watch Crouching Tiger, Hidden Dragon from describing themselves as China “experts” because that “two aspirin” mentality still exists for everyone from wine producers to those seeking to sell their books, classes, or feature articles.

    By the way, as Wine Future happened in Hong Kong, with not a few people wondering what was happening in China, we were holding our third annual Grape Wall Challenge in Beijing, with Chinese consumers blind-tasting wines that retail for under rmb100. Not quite as sexy as drinking French wine with Parker, but in case anyone is interested in what people who buy their wine at the local Carrefour, 7-ELEVEN, Jingkelong Supermarket et al think, here are the results:

    http://www.grapewallofchina.com/category/grape-wall-challenge-2011/

    Cheers, Boyce

  9. November 11, 2011

    You can find much more on the Parker-Pancho Campo-Jay Miller flap here: Another Brouhaha Involving Pancho Campo, Robert Parker’s The Wine Advocate and Parker’s Spain Correspondent Dr. Jay Miller (With entries from Mike Steinberger, Dr. Vino, Jim Budd and myself; http://www.gerrydawesspain.com/2011/11/another-brouhaha-involving-pancho-campo.html)

  10. November 11, 2011

    Mike: ‘The seminar struck me as an exercise in wishful thinking.’

    Very true Mike. It was actually a wishful invention by whoever wrote the two November statements from Asevin and I don’t think we need to look any further than Pancho Campo. Curious that the second statement was issued on the eve of the WineFuture show.

    The seminar was concocted because it was essential that the Murcia trip could be presented as an ‘unofficial’ visit by Jay Miller. Essential because otherwise the proposed visit bust the Parker code asunder. The key is to look at the emails sent by Jiménez and Teresa Torres during October. No mention of marketing seminar – conference + master class yes. Remember what Jiménez told Dr Vino: ‘I asked why they were raising the funds and he said it was to cover the costs of organizing the events, including a “colloquium” where wineries present could ask Jay Miller questions.’ Still no mention of this marketing seminar.

    No the October emails (sent before the story broke) all talk of a visit by Jay Miller to rate the region’s wines and report on them for The Wine Advocate, so it was an official visit by Miller and should have been organised in accordance with the Parker code. Even the guidance on the wines that could be submitted sent to Murcia by The Wine Academy of Spain spoke of ‘rating’.

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