October 17, 2012

Chinese-Owned Virginia Winery Targets China’s Burgeoning Oenophile

Mainland China Now #5 Export Market For US Wines, HK #3

La Grange started exporting to China in August (Image: Lady Vino)

With French imports continuing to dominate at the high-end of China’s booming wine market and domestic players battling it out at the low-end, US winemakers have moved quickly to occupy the increasingly lucrative mid-market. Currently, Hong Kong is the third-largest export market for American wines, with shipments leaping 48.4 percent last year to US$145.9 million, while mainland China is the fifth-largest, with exports climbing 38.3 percent in 2011 to $55 million. Though their combined $200.9 million is less than half of the $447.6 million exported last year to the EU, growth to the 27-nation bloc rose a tepid 10 percent, indicating to many US winemakers that more aggressive efforts across the Pacific might not be a bad idea.

Though California in general, and Napa Valley in particular, is most readily associated with US wines in China, growers in less widely known regions are also looking to gain a foothold in the nascent but huge market. (Now the world’s fifth-largest wine market, despite per-capita annual consumption that only broke the one-liter mark this year.) Joining Oregon and Washington wineries that have made overtures to Chinese consumers in recent years, one such China hopeful is Virginia’s La Grange. Founded in 2005 and purchased this year by the Chinese company Beida Jade Bird, La Grange recently began shipping a limited number of bottles to China this August to test out the market.

From the Washington Post:

Although the approximately 2,400 cases of Cabernet Sauvignon and Merlot that the winery sent overseas in August won’t mean big profits, La Grange hopes it means getting in on the ground floor in a market expected to grow exponentially in the coming years.

Plus, the lesser-known Virginia wines have an advantage there. In China, “we’re going neck-and-neck with California,” said Fletcher Henderson, La Grange’s general manager and an assistant winemaker. He said that even though the average American drinks about 14 liters of wine per year, making it the biggest wine market in the world, the Chinese traditionally know little about wine, preferring beer and liquor in social situations. The Chinese drink about one liter per year, Fletcher said.

But as wealth and the Chinese economy has grown, so has interest in imports, particularly from France. “Think if they bumped it to three liters per year,” Henderson said, noting a Chinese population of around 1.3 billion.

La Grange winery

Despite the optimism, the fact remains that awareness of Virginia wines is virtually nonexistent in China, and building knowledge and appreciation for La Grange’s wines among a whole new consumer base is no small task. Yet Jing Xu, Beida Jade Bird’s representative at the winery, thinks that Chinese drinkers will be open to other US wine-growing reasons, adding that one of the reasons his company purchased the company is that “California wine is well established, which means plots of land are harder to find and good investment opportunities are scarce.” This could mean that we may see more Chinese investors looking to get into the vineyard-buying game outside of California in the US as they have in Australia, Bordeaux and (more recently) in Burgundy.

So what can Chinese drinkers expect from the Virginia wines now showing up in limited amounts on their shores? According to the Grape Wall of China blog, referencing the recent Virginia Wine Summit led by wine critic Steven Spurrier:

As for grape varieties, Spurrier endorsed viognier as Virginia’s “calling card for whites,” and cabernet franc and petit verdot as its strongest reds. “Petit verdot is almost a unique calling card for reds,” he said, repeating a favorite analogy, “because very few wine regions in the world make a varietal petit verdot.”

Considering petit verdot is most commonly paired with heartier meat dishes, among them barbecued lamb, roasted duck or pork ribs, La Grange’s reds sound like a perfect fit for northern China, particularly in Beijing. Peking Duck or chuan’r with a nice glass of Virginia wine? It might just work.

Business & Finance / Culture / Food, Wine, & Spirits / Investment / Lifestyle / Market Trends / Marketing & Branding
Tag: acquisition, american wine, bordeaux, burgundy... , More
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