[Mir Global Wine Corner Analysis] – HKTDC article, “China’s wine imports slowing.”

China’s wine imports are slowing reports HKTDC in this article. Wine imports increased a incredible 100% between 2006-2007 but slowed between 2008-2009, growing only 36%. None the less, total imports reached a impressive 6,389,439 cases, or 76,673,268 bottles of wine, making China the world’s largest wine import market (once again according to this HKTDC article).

Despite the slow down, the macro picture of China’s wine market is still overwhelming positive for wine exporters, especially for lower cost producers in the Southern Hemisphere.

The challenge for Argentinean and Chilean producers will be to figure out a way in which to take advantage of a more conservative and cost conscious Chinese consumer in the midst of the global economic downturn.

The HKTDC article, is of the opinion that the biggest winner from slowing wine imports will be China’s domestic producers. While this may be partially true, Mir Global Marketing Co., attributes the rise in the consumption of domestically produced Chinese wine to other far more significant market factors.

1) The global slowdown has forced consumers around the world to cut back on luxury spending and to be more cost conscious. For the Chinese wine consumer who has yet to develop their wine pallet and is exploring wine for their first time, it makes sense they would economically rationalize to spend 20 rmb on a Chinese bottle versus 120 rmb on a French bottle.

2) Wine demand in China can partially be attributed to the symbolism behind wine. As the great American author Ernest Hemingway once said, “Wine is the most civilized thing in the world.” If you are a Chinese consumer who has yet to develop your personal wine preferences and are trying to network in the business or political world where it is a good thing to appear “sophisticated,” you might be able to accomplish this with a Chinese bottle of wine. So, why invest in a expensive French or Italian bottle of wine?

Although, if a lower-middle class university student was about to meet with the head of Google’s Recruiting Office in Beijing, and had never tasted wine in his/her life, I think it would justify dipping into your savings for a French bottle of wine. But, if you’re simply going out for a nice drink with some friends on a Friday night to the Beijing’s bar district, splitting a bottle of French wine when you don’t know what you’re tasting will not be a common site.

To further explain:

A considerable amount of wine demand in China is generated from a new elite class of consumers with considerable spending power who can afford expensive wines and liquors. This includes, the rising class of sophisticated, metropolitan consumers in cities like Beijing, Shanghai and Guangzhou. Businessmen and women. Politicians. Wealthy university students. Chinese who have lived abroad. And of course, foreigners living or visiting China.

However, the majority of China’s new wine consumers can not afford to indulge in relatively expensive bottles of wine, especially in times of economic uncertainty. What is more likely to occur is the new middle class consumers in 2nd and 3rd tier Chinese cities like Harbin, Dalian, Suzhou, Chongqing, Kunming, Taiyuan, etc will attempt to emulate (the best they can) China’s new class of rising elites.

This has been the case in societies around the world since the dawn of civilization.

The main difficulty for Argentine and Chilean producers at the moment is convincing the very brand conscious Chinese to trust the quality of their products. France remains synonymous with quality when it comes to wine, while wines from Italy, Australia and Chile have had to struggle for years to build a trusting image with Chinese consumers.

Opportunity has come knocking at the door. Before you answer, just make sure you and your company are ready.

Bennett Reiss – International Trade Consultant at Mir Global Marketing Co.

China’s Wine Imports Slowing — HKTDC

“China has always been the biggest market of wine imports globally. However, the situation is changing. With the rise of China’s domestic wine production, China’s import of wine is on a downward turn.

After world renowned brands Hennessy, Remy Martin and Martell, Courvoisier’s Napoleon wine, one the four top-class brands of wine in the world has announced its formal entry into the Chinese market. Not long ago, Hennessy announced the debut of its Iridescence, a world classic type X.O. on the China market, alleging that China was its biggest consumption market for the first time.

Although various brands of imported wine products have poured into China’s market, the import growth has slowed down. According to statistics from the customs, China’s import of packed wine of less than two litres slowed down its growth last year, and the import of wine in packaging of more than two litres has stayed at the same level for three successive years. After hefty rises of about 100% in the 2006-2007 period, China’s import of wine was 6,389,439 cases of packages of less than two litres (nine litres per case), rising 36% year on year.

The increase of raw materials for wine production has weakened China’s dependence on import. With the expansion of planting areas for grapes, the raw materials for wine production have increased gradually. However, with increasing expansion of China’s wine market, there will be more and more foreign brands of wine entering the China market, indicating more fierce competition for China’s wine- making industry in the coming years. “

The results are out, the reviews have been written, and now its time to sample the 2009 wine harvest. At lease this is the case for producers in the Southern Hemisphere of the world.

As producers in North America and Europe watch their grapes ripen, vintners in Argentina, Chile, South Africa, Australia, and New Zealand are preparing to sample their first bottles of 2009.

A healthy growing season is paramount in the process of ultimately producing a quality wine. This is of course why certain regions in the world excel in wine making. These regions are blessed with extremely conducive climates for growing grapes used in wine making. This is why regions like Mendoza, Argentina have historically been known to consistently produce high quality wines. Click here to read more about the region of Mendoza from Mir Global Marketing’s home page)

This article from the Winespectator.com provides links to the publications reports on how the 2009 grapes have turned out in Chile, Argentina, South Africa, Australia and New Zealand.

Argentina: Heat spike hurts Argentine white wines, but reds weather the warmth

Chile: A warm and dry year leads to ripe wines and slightly higher yields

South Africa: South Africa’s wine regions enjoy a cool, dry season, producing quality across the board

Australia: Yields are down in most regions, but a cool, dry season may have produced elegant reds

New Zealand: A moderate growing season bodes well for the country’s reds and whites

To access complete country harvest and grape reports from the Winespectator.com, please click on each respective country link

Uncorked: Here’s to the tango and Argentine wine
By Pat Kettles, Wine Columnist at The Anniston Star

The first vestige of winemaking was brought to Argentina by Spanish conquistadors and missionaries who made their way from Mexico to the area in the latter part of the 16th and early 17th centuries. They brought native grape cuttings from their Spanish homeland including varieties not well known today like criolla, still grown in Argentina today, and the common mission grape currently grown in limited quantities in California.

New waves of European settlers came to Argentina in the early 1800s, bringing vine cuttings from Spain, Italy, and France. Among these cuttings was some malbec that now forms the backbone of the Argentine wine industry. Remarkably, these cuttings originated before the dreaded root loose, phylloxera, afflicted European vines. Most Argentine malbec is planted on original rootstock rather than grafted to disease resistant stock like most vines in other wine producing countries.

Malbec is one of five varietals allowed in the department of Bordeaux in France. It was virtually wiped out in this area by a killer frost in 1956, and it was not widely replanted. Some malbec is grown in California, but American varietal bottlings are rare. It is in Argentina this variety thrives.

Argentina produces and drinks a lot of wine. No wonder tango is the national dance. Argentina is the fifth largest wine producer in the world behind France, Italy, Spain and the United States.

Mendoza, Argentina

Only fairly recently have Argentine wines been significantly exported because the native populace drank most of the domestic wine produced. Tango apparently requires a lot of wine. As long as the populace was willing to drink copious amounts of poor quality wine, there was no need to contemplate exportation.

When years of political instability ended, the Argentine wine industry had been left behind. The industry set out to modernize like Chile, the neighbor to the west, who was exporting significantly improved quality wines primarily to the United States. Like Chile, Argentina’s producers adapted winemaking methods modernizing and producing wines in the New World style with the aid of advisors and investors from America and France.

The modernized industry started to focus on malbec. Malbec seems especially suited to the terroir. Although prone to disease in other areas, it’s not as susceptible to mildew and rot in Argentina perhaps because it is grown on some of the highest altitude vineyards in the world.

These high altitude vineyards exist in dessert-like conditions with long uninterrupted, dry sunny days. Irrigation is a necessity. In the past winegrowers allowed vineyards to flood. Today better producers use the Andes snowmelt ancient irrigation system more judiciously. They know to produce grapes of great flavor and intensity, yields must be kept low and vines must struggle.

New winemaking practices produce an entirely different malbec than that produced in Bordeaux and in Cahors in southwest of France. Some say malbec is like a weaker version of merlot. The ones I have tasted lately are not tame. They are generally big, easy drinking wines of firm structure.

Aside from drinking wine and dancing the tango, Argentineans eat copious amounts of meat, especially beef. They are known for their open-air spit barbeques called asados where steak, beef ribs, pork sausage and even chitterlings are grilled. Malbec is the perfect wine for the asado and for our traditional charcoal grilled steaks and summer barbeques. It is attractive in today’s economy because good malbec can be had at a reasonable price.

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Click here to access Pat Kettle’s full article from The Anniston Star