Argentina Winemakers Hope To Challenge French Dominance In China

    However, with wine consumption growing not only among wealthy Chinese, but also the country's younger, urban middle-class drinkers, opportunities are arising for New World and (non-French) Old World winemakers as well.
    Argentinian wineries hope to gain a foothold in China's fast-growing imported wine market
    Jing DailyAuthor
      Published   in Finance

    Argentina Exported US$17.6 Million Worth Of Wine To China Last Year#

    When it comes to wine, the burgeoning Chinese oenophile’s single-minded preference for high-end French wines has become the stuff of legend. However, with wine consumption growing not only among wealthy Chinese -- who tend to home in on top-flight Bordeaux and Burgundy, and little else -- but also the country's younger, urban middle-class drinkers, opportunities are arising for New World and (non-French) Old World winemakers as well. Last year, Chinese consumers purchased some 156 million cases of wine last year, a 20 percent rise over 2010, pushing the country past Great Britain to become the world's fifth-largest wine market. With consumption rising quickly, major wine-making countries have rushed to establish stronger footholds and better position themselves to compete with the dominant French.

    With a growing number of American, Australian, Italian, Spanish, Chilean, and domestic Chinese winemakers attacking the lucrative mid-range, and a growing number of middle-class drinkers looking for more than the usual big, bold French red, winemakers from countries like Argentina clearly feel the time is right to chase their China opportunity. Having only exported 420,307 nine-liter cases of wine to China last year -- compared to 6.8 million to its top export market, the US -- Argentina thinks China is a massive, largely untapped, potential market.

    Still, this doesn't mean it'll be a slam-dunk. Awareness of Argentina as a wine-producing country remains extremely low in China, and a relative dearth of "big-brand" wines compared to France (whose Lafite, Petrus and Latour are well known among budding Chinese aficionados), distribution challenges, and very intense competition in its price-point mean it'll be a long uphill battle for Argentinian winemakers to make their names in China.

    However, according to Antonio Mompo, manager for Wines of Argentina in Asia, the marketing "sweet spot" for Argentinian wine hinges on its relative lightness, which he feels "caters to the Chinese sweet palate." Mompo added that he feels lighter wines can gently nudge Chinese wine consumers towards a wider array of wines. As Mariano Di Paola, head winemaker at

    Rutini Wines#

    , told China Daily, many Argentinian wineries expect Chinese newbies to be charmed by the country's Malbecs, which "have softer tannins and cleaner aromas" and proved highly popular with drinkers in other key markets like the US in previous decades.

    Rutini is one of a select few Argentinian wineries that have made inroads in the China market, leveraging its relationship with Argentina's Chinese community, which traces its roots back to Fujian province (and, increasingly, does business in Fujian). Mompo added that "Rutini Wines is a well recognized brand among the Chinese circle in Argentina," noting that the wine has "thrived" on this connection. Additionally, the winery's name, which is easy to pronounce and remember when transliterated into Chinese, which has given it a leg up on the competition. Despite being a relatively small-scale producer in its native Argentina, Rutini is positioning itself as a high-end label in Fujian as well as broader China, with the winery's Sol Asensio recently saying, "We are trying to become the Chateau Lafite for Argentine wines."

    In addition to more crowd-pleasing and entry-level taste profiles, Argentinian winemakers think they'll be able to gain a following in China due to another major advantage over France: lower prices. As Tommy Lam, wine program director at Shanghai Jiaotong University, told China Daily, "The Chinese will soon realize this is a good wine at a good price."

    Still, its lower average pricing compared to French or Australian wines could prove a double-edged sword for Argentinian wineries, as wider appeal among younger middle-class drinkers could increase overall sales yet preclude these wines being purchased with the intention of gift-giving -- hitting long-term prestige. However, as a recent study by Wine Intelligence concluded, winemakers with little or no presence in China are likely better off target not the big-spending wealthy demographic but rather the so-called ”Social Newbies” and “Casual-at-Homers,” those just now dipping their toes into the wine market and learning about wine in earnest. For winemakers looking at entering the China market in the mid- to low-range of the market, these are perhaps the right groups to shoot for, as they have shown themselves highly adventurous, proving far more willing to try different wine-making regions than older, more entrenched drinkers.

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