China's taste for French wine grows along with its economy
They're buying the wine by the case. And wineries, too.
May 5, 2014
China, with its dramatic economic development, can now boast a new claim to global leadership: It has become the world's biggest market for red wine, especially from France.
The country bought nearly $2 billion worth last year, more than double the sum just a few years earlier. The demand is helping push up prices for high-end wine, especially the French Burgundies and Bordeaux to which the Chinese are attracted.
And Chinese aren't just buying French wine; they are also buying entire French wineries. During the last five years, as many as 60 châteaux in the Burgundy region have been snapped up by Chinese investors and connoisseurs.
French red wines have auspicious associations
Red wine from France appeals to the Chinese for many reasons. For starters, red is a lucky color, especially in contrast to white, which is usually associated with funerals. The wines pair nicely with much many of China's numerous regional cuisines. And, most important, French red wine is associated with European sophistication and luxury and has become an obvious target for the sort of aspirational consumption commonly seen in newly wealthy economies, such as the United States after World War II.
As the appeal of wine grows, Chinese oenophiles are not only importing wine from France; they are travelling there to learn about it. That country's Bordeaux International Wine Institute offers classes in wine for industry professionals; this year, a third of its students are from China.
Jeff Zacharia, head of New York-based Zachys Wine and Liquor, holds auctions in Hong Kong that attract scores of China's new elite. He says the Chinese market plays an increasingly important role in his business. "As China has created a middle-class, an appreciation for wine has developed along the way," he says. "There is certainly a drive to enjoy luxury brands in China. And, of course, wealthy people are looking to enjoy themselves in even bigger ways."
That's something of an understatement. Zacharia, a Cathay Pacific Marco Polo Club member, says he has seen single bottles of Romanée-Conti fetch up to $15,000 in China.
Hong Kong is a popular destination for wine-loving Chinese, in part because its has no tax on wine, in contrast to the steep alcohol taxes in China itself that often prevent working class Chinese from enjoying the beverage with their meals.
While China may not be ready for white wine or champagne, its taste in red wines continues to evolve. Bordeaux wines have peaked in popularity, but burgundies continue to be in great demand, says Zacharia. These shifts are sometimes the result of changing taste buds, though cultural and political events play a role too, he says.
The Lafite Rothschild label has lost some of its luster, he says, because it became associated with questionable business and political dealings that the current government is trying to crack down on. "A lot of Lafite was given out as gifts," Zacharia explains. China also has its own thriving domestic wine industry; in fact, 80% of the wine consumed in China is grown and produced there. While Chinese vintages improve every year, Zacharia says they aren't yet a match for those of France, with hundreds of years of that nation's wine-making history to draw on.
American vintners try to not be left out
The Chinese appetite for French wine has not gone unnoticed by other wine-producing countries, including the United States, all anxious to be cut in on the action. Napa- and Sonoma-based wineries in California have held "virtual wine tastings" on the Web for potential Chinese customers, and the state's governor, Jerry Brown, talked up Golden State wine on a recent tour.
But the French aren't taking anything for granted. During the recent state visit to France by president Xi Jinping, wine played a crucial role in his host's charm offensive, which included tastings and tours.
While American wines are noted for their bold flavors and high alcohol content, French wines have — in addition to their label — the more subtle taste that Chinese prefer. That means France is likely to maintain its advantage, Zacharia says. But the market is still young, and the Chinese are evolving into a nation of oenophiles, and can be expected to learn to like new things. "They're definitely hungry to learn more about wine," he says.