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For China's Newly Affluent, Imported Wine Is De Rigueur
The Cost Is Part of the Charm, as Urban Consumption Surges

By Maureen Fan
Washington Post Foreign Service
Sunday, January 28, 2007

BEIJING -- Cocooned in a wood-paneled, members-only bar on the 50th floor of a private business club, Yao Yi, a corporate lawyer in Beijing, hunched over her glass, swirling and sipping a 2003 merlot from Washington state.

"It's quite young. So, not France. There's no Australian option here. Maybe we can choose New Zealand, it's close," Yao said, laughing during a blind wine-tasting quiz at Beijing's Capital Club.

In the end, Yao and her friends guessed that it was an American wine. They also got the vintage right, scoring five points for the team and more credibility for increasingly educated Chinese wine consumers.

Yao's interest in imported wine began five years ago. Now, critic Robert Parker's wine scores roll off her tongue as she compares the best of Napa Valley with wine from Australia's Barossa Valley. Over New Year's she spent more than $2,100 on 14 bottles of French Bordeaux.

It wasn't always this way. In fact, many Chinese consumers still treat wine as a ceremonial prop for toasting, sometimes downing an entire glass as if it were a popular Chinese grain alcohol known as baijiu. Selection of wine by the glass is still very limited in most Chinese restaurants. And wine is expensive, compared with beer and other alcohol.

But these days, the cost is part of the charm.

"More and more Chinese drink wines, because it's fashionable and a kind of social status," said Zhou Ning, market strategy manager of a Beijing-based real estate company whose ads often feature young couples drinking wine or beautiful women lounging with a glass of wine. "We include wine in our ads because we want to tell potential customers that people living in our apartments are elegant and cultivated, and they pay attention to quality of life."

This country has a growing urban middle class; experts estimate that roughly 500,000 Chinese earn as much as $64,000 a year, though exact figures are hard to come by. Meanwhile, the tastes of the newly affluent in Beijing and Shanghai have driven sales of a wide variety of luxury items.

Citing data from China's customs bureau, the Shanghai Daily newspaper recently reported that wine imports surged by 91 percent in the first nine months of 2006. According to industry experts at a conference in Beijing this month, consumption of wine rose 13 percent between 2004 and 2005, to about 564 million bottles.

The surge in imports is largely the result of an increase in bulk wine being sent from Australia, Chile and elsewhere in 6,000-gallon bags. That wine is then combined with local ingredients and sold as Chinese bottled wine, often with names such as Dynasty or Great Wall, experts said.

"It's all part of the luxury goods thing that's going on, why the men are buying Zegna suits and the ladies are buying Louis Vuitton bags. They've been traveling the world," said Don St. Pierre Sr., co-founder and chairman of ASC Fine Wines, the largest wine importer and distributor in China. "It's really starting with the new emerging middle class, and moving up to the richest people."

As wine becomes the latest fashion accessory, MBA students are learning about wine appreciation, executives are asking how to build private wine cellars and tastings have graduated from paper cups to glasses, attracting sell-out crowds.

Chinese restaurants such as the high-end Tian Di Yi Jia, just off Tiananmen Square, offer wines that are "full flavored, rich in oak" and often sipped in private VIP rooms. Owner Robert Cho can recommend what goes best with marinated fresh abalone, hairy crab leg or yam with preserved plums.

When a secretary called from Shanghai earlier this month to make a reservation for her boss, an executive in the financial industry, Cho suggested the Chateau Chambeau Lussac St. Emilion, or, alternatively, the Chateau Gruaud-Larose Sarget de Gruaud-Larose St. Julien, which at $126 is the cheapest bottle on the menu. The most expensive is a Pomerol, a 1994 Petrus that sells for $2,154 a bottle.

"Half our Chinese guests don't know much about wine," Cho said. "They know Chateau Lafite, Chateau Margaux, but they don't know California or Australian wines. People know Lafite as a benchmark, like Rolls-Royce or Dior. . . . They buy wines like they buy watches and cars."

The other half are familiar with imported wines, Cho said, because "they study abroad, have a good position and know that wine is part of Western food culture."

Most bottled wine in China sells for less than $5 a bottle, a category that grew by about 19 percent between 2001 and 2005, according to recent figures from the organizers of the French-based wine trade show Vinexpo. Wine priced at more than $5 a bottle grew by 86 percent over the same period, while bottles that sold for more than $10 grew by 110 percent.

The role wine plays in enhancing people's status has made it a tool in the endless dinners that are an essential part of doing business in China.

"Face is important in China. Wine is part of the show," said Alex Remy, manager of the Beijing office for Sopexa, which promotes French food and agricultural products worldwide. "Lots of people buy wine for the status, not only what it brings to a person but also to the person you give it to."

In 2002, when Zhao Fan, a wine critic, first started hosting private tastings for friends and acquaintances, only seven people showed up. Now they're so popular that he has to limit attendance.

"Four years ago, people were from different walks of life, like electronic equipment companies, French insurance companies or media, and they all knew about wines. They earned about 7,000 to 8,000 yuan [$897 to $1,026] a month, which was quite a large amount at that time," said Zhao, who also teaches a popular wine appreciation course at China Agricultural University in Beijing.

"Now, more people come to tasting parties, but not all of them know that much about wine. Some just hold the bowl of the wine glass instead of the stem. They are from state-owned enterprises or they are university teachers or students."

While there are exceptions, many of China's hundreds of new wineries are not yet producing wine at a standard recognized in the West, according to Stephen Reiss, an Aspen-based wine educator who a decade ago was a member of the first U.S. wine delegation to China since 1949.

Since then, Chinese wine has become more expensive, but still has a long way to go. "The packaging and presentation elevates the price point, which further alienates the wine from its peers. It is not good at $5, so it is really not good at $20," Reiss said.

"On the political side, there is very little incentive to create quality over quantity. On the social side, criticism is hard to deliver, and harder to take, it seems," said Reiss, who is paid to critique Chinese wines. After delivering one report, he recalled, the Western liaison he was working with said: "I don't know how I will be able to use this. Could you rewrite it so it is not so critical?"

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