Archive for the 'China' Category

China threatens EU wine tariffs


China is waving a broken wine bottle in international negotiations: in retaliation for EU tariffs of 11.8% against Chinese solar panels, Chinese authorities have threatened to place trade barriers on EU wine. The EU alleges that China dumps solar panels below the cost of manufacture and China alleges the same thing for EU wine, pointing to subsidies to the industry. See this Reuters account for details.

But who really stands to lose, European wine producers or Chinese consumers who have acquired a taste for European wines? Well, surely the Lafite crowd in mainland China won’t be crying into their Riedel stemware as they could likely afford to pay any new duties. (Notably, wine coming into Hong Kong would still be exempt.) But it could shift Chinese consumption to other parts of the wine world, such as Australia or the US. Or maybe it would spur interest in domestic wines from China. Or maybe it would snuff out their newly stoked interest in wine. There are always unintended consequences in trade wars.

And, more often than not, tough talk is just a bargaining tactic.

DRC Lafite Languedoc! [China]

Simon Staples, aka @BigSiTheWineGuy who is sales director and Bordeaux buyer for Berry, Bros & Rudd, tweeted this photo. Notice anything amiss? Here were his comments:

Romanee Conti and Lafite together? In a “Vin Rouge Sec”? From the Languedoc? Here it is!…..Gotta be a 100 pointer!!

He added in response to a commenter that he was sent the bottle from China, adding “Could be a bit of a fakeO methinks. Very inventive!”

China’s top wine influencer

Who wields the most influence on wine in China? As the year of the dragon kicks off soon, I put this question to various China insiders.

Ian Ford, partner at Summergate, a leading wine importer to China: Yao Ming. He is a mega-star and having him talking about his new wine from California is not just good for California wine, it’s good for all of wine in China. [Summergate does not import the new Yao wines – Ed.]

Jeannie Cho Lee, Master of Wine, author of Asian Palate & Mastering Wine: Han Changfu the current Minister of Agriculture of the People’s Republic of China; controls all national agricultural regulations including wine and can move entire market with one policy change.

Jamie Ritchie, CEO & President, Americas and Asia, Sotheby’s Wine. The Government: who controls both supply and price. By keeping zero tax on wine in Hong Kong, you have this thriving market, that we all know and love (even despite this short term scaling back in demand/prices). In Mainland China, the same is true, as the import/hygiene restrictions limit a more free and open market. A favorable regulatory environment is the most important key to any market.

Debra Meiburg a Master of Wine based in Hong Kong: That’s a tough question. The mainland market is quite fragmented. Voices in Beijing are unknown in Shanghai and vice versa. Don St. Pierre or the Summergate teams are obvious choices as the leading fine wine importers in China. The domestic industry is stepping up their game and in that regard Professor Li Demei is highly influential (Chinese Agricultural University) as well as Professor Ma Huiquin. The auction houses capture the international headlines, but are connecting with a small number of people with deep pockets.

Chinese wine smuggler sentenced to life in prison

Sun Xitai, a 62-year-old businessman in China has been sentenced to life in prison. His crime? Bringing about $7 million worth of wine, mostly Bordeaux, from Hong Kong to mainland China and failing to pay sufficient duty.

You can get the whole story in an interesting post on Bordeaux Undiscovered. The post cites China’s Legal Daily saying that 70 percent of imported red wine is smuggled, which seems a staggering amount. Travelers from Hong Kong to China are allowed to bring one liter of wine or spirits legally.

While I don’t know the details of this case and how much was imported when, but it does seem odd that the period involved is 2004-2009. After all, Hong Kong scrapped wine duty in only in 2008; before that it was higher than the mainland, where the duties total about 50 percent of the imported price. So this harsh punishment may be more to set an example to curtail such activities.

He had this final comment about the duties: “It would be difficult to stay in business if I went through official channels.”

Will China buy more foreign wineries? 20 wine questions for 2012

The Mayans forecast a cataclysmic finish for 2012. My crystal wine glasses are not as clear, so instead of forecasts, I ask twenty questions relevant to the wine world in 2012.

Will dogmatism die? Sommelier Raj Parr disavows 14% as a litmus test for pinot; other somms say they are not into “natural” or organic wine movement as much as they are into the “good wine movement.”

Will prices of European wines fall if the euro weakens? Dream on.

Will India drink more wine? If import tariffs are significantly lowered, it can only help.

Will China go straight to the source and buy more wineries? The state-owned COFCO bought Biscottes in Chile in 2010, in part as a result of preferential tariffs; it could be a harbinger of things to come.

Will Americans put less wine on the table? Economic malaise could derail two decades of per capita growth in wine consumption; craft beer represents a real threat.

Will the Chinese embrace white wines? They go much better with the cuisine than reds.

Will Yao Ming’s small production wine boost all of California wine in China?

Will Bordeaux downturn morph into a free fall? Probably not but the top wines have already slowed notably.

Will box wines get better? In the category that producers and consumers like for the cost-savings, the trend is up but it has a long way to go.

Will wine writers disclose potential conflicts of interest? Transparency is key.

Will more wine blogs cease? The lack of a financial model still plagues the medium.

Will remaining wine blogs get better? Twitter and Facebook have siphoned off the “what I drank last night” posts; in order to break through the chatter, blogs have to have a strong voice, point of view, or original contribution relevant to the broader discussion about wine.

Will a wine newsletter fold? Charging anything limits audience size.

Will points self-destruct? Score inflation is rampant and remains the biggest threat to scores themselves.

Will more retailers become points-free zones? As Americans’ confidence with wine climbs, shops may not need to turn to third-party shelf-talkers.

Will freer trade in wine emerge within the US? New Jersey indicates a limited yes but the biggest unknown is what will happen with HR 1161 in the unpredictable lame duck Congress in November and December.

Will romorantin be the next hot grape variety? No, but it’s worth trying a good example.

Will malbec’s growth slow? Probably, if only because it can’t grow at 49% forever.

Will wine come from more far-flung parts of the world? Yes–crack a foreign pronunciation guide to unlock the frequent discount hidden behind unpronounceable or difficult words on labels.

Will wine remain fun? Oh yes.

Have questions of your own? Hit the comments and share them!

Madrid, tragedy, Yao Ming, Masa BYOB — sipped and spit

SIPPED and SPIT: saber rattling
Jim Budd posts more revelations about Pancho Campo and Jay Miller, including emails involving a $31,000 tasting for the wines of Madrid that the regional body could not afford. On his web site, Robert Parker threatens to sue over the recent revelations. Jim Budd pushes back against such a prospect.

SIPPED: tragedy
A blogger views the events transpiring in Spain through the lens of Aristotelean tragedy. But how does it end? [koskeloonwine]

SIPPED and SPIT: Yao Ming wine
Yao Ming, former NBA player and current wine enthusiast living in Shanghai, has released a Napa cabernet that will sell for $289 a bottle in China (including duties and sales tax). Blake Gray points out that the wine is not from a specific vineyard; Cameron Hughes elaborates in the comments that he bought similar wine for $5 – $25 a gallon on the bulk market. (There are about five wine bottles to the gallon.) A higher-priced wine, Yao Family Reserve, is expected soon. [WSJ, Gray Report]

Over on Chowhound, a commenter wonders if it is okay to bring wine, specifically Armand de Brignac “Ace of Spades,” to MASA where the corkage fee is $90. Over on Facebook, Lyle Fass quips that the bling bottle merits that “They should charge your ass double!!” It’s an interesting idea to have restaurants vary corkage fees depending on whether they like a diner’s wine–how much for Chateauneuf du Pape at Masa? Or Yao Ming cab?

Of wine and tulips [China]

What has hints of red fruits, leather, tobacco, and tulips? Why, the wine investment market!

Elin McCoy reports from Hong Kong that a fund there will lend up to $641,000 (USD) for investing in wine–providing the investments are in the bank’s select list of 50 top names. She also reports that a new fund at Pacific Asset Management seeks to invest over $150 million in wine (it’s raising $30 million initially). There’s talk there of other funds diversifying into wine; some European wine investment funds have opened offices.

More money, chasing wines and returns while dodging counterfeits, smacks of tulip mania and the greater fool theory. When will some financial wizard develop a way to short wine?

One aspect of the wine market that defies tulip mania is the fact that even as more money appears to be rolling in, top Bordeaux prices are falling: the Liv-Ex Fine Wine 50 Index that tracks the last ten vintages of physical (not en primeur) Bordeaux first growths is down 18% in the past quarter. Interest in red Burgundy is up, as is interest in non-first growth Bordeaux. Breadth of wines is probably healthier than all the money funneling into a small group of wines and a broader index of wines is up 13% over the past year, but with declines in the past quarter. And a recent Hong Kong sale saw only 84% of lots sold. So maybe there is some sanity.

Hopefully, if it crashes, whoever is left holding the proverbial bag will have a corkscrew. And real, not counterfeit, wines.

A Scottish castle. Typhoons. Explosives. #shandong #china #lafite

I joked yesterday on Twitter that no blog post seems complete today without mentioning either China or Lafite! So indulge me in one more post about the wine flavor of the month/year/decade….

News is out today that Lafite (DBR – Domaines Baron Rothschild) has left their Chinese importer and distributor, Summergate, after seven years. Jim Boyce in Beijing talked with Ian Ford, an American and founding partner of Summergate. Ford says that they rebuffed Lafite’s offer to buy a stake of the company. Thus Lafite will be shifting their distribution to ASC wines (which is 70% owned by Suntory).

But the crazier story about wine in China is the one involving the building a Scottish castle, typhoons, explosives, and 600 tons of chicken poop. These are all part of various vineyard developments occurring in the Shandong province, which lies on the eastern coast. The Daily Mail (!) visits the location and files a fascinating story with many pictures. Lafite is among the players, developing a 50-acre vineyard (with 350 acres in reserve) in with the state-owned CITIC. (To make the terroir just right, the Daily Mail writes that “explosives are being used to smooth out the broad vine terraces.”) Be sure to see Jim Boyce’s local take on whether or not the site is as “grand cru” as some have claimed!

Also, enjoy this parting shot of the Château Changyu AFIP outside of Beijing.

Image 1: reduced size crop of image by Lou Linwel/Sinopix
Image 2: reduced size crop of image by Janis Miglavs


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