schiller-wine

Picture: Jeannie Cho Lee, MW

Will the American Parker Story Repeat itself in China?

Many people say, China’s wine industry is now there were America was 50 years ago. In the last 50 years, we have seen a wine revolution and boom in America and a lawyer from the Washington DC region emerging as the most influential wine critic in the world, guiding the American consumers with their enormous purchasing power in the choice for buying a wine and having an enormous impact on wine making around the globe.

While being very popular and highly appreciated in the US and elsewhere, Parker is very much disliked in Europe. Many Europeans feel that European winemakers have changed the style of their wine to please Parker and to get high scores from him. Parker, in their view, was also detrimental to a diversified range of wine styles. Everyone was moving towards Parker’s taste. Because, when he gave high scores to wine, 200 million American wine consumers would by the wine.

Will the same happen again with China? Will a Chinese wine expert emerge as leader of the large and growing purchasing power of the new generation of wine consumers in China? Who will be the Chinese Robert Parker? Will there be another Parker effect?

The Parker Effect

The Parker effect – European wine producers were changing the way they had been making their wine for ages with the view of pleasing Mr. Parker and achieving high points in his ratings – had two root causes.

First, the globalization of the wine market. Bordeaux wine were not only shipped to London any more but around the world, including to America and Japan, where affluent consumers started to drink wine.

Second, these affluent consumers were new in the wine business. Before World War II, there was no wine in America – the period of Prohibition. After World War II American military personnel observed diners in other countries enjoying daily wine with their meals, and they brought this concept back to their own homes. The sale of gourmet cookbooks rose, wine tastings became popular as a new kind of social event and wine became a symbol of culture and status.

The American Wine Boom and the Unsure American Wine Drinker

In 1968, consumption of table wine finally surpassed that of dessert wines in the US. And by 1972, wine consumption was 340 million gallons, or about 8 liters per person, which was three times the figure before prohibition. A wine revolution had begun in the US.

But American wine consumers were unsure. Wine was a new thing. They had not gone through the school I had gone through in Europe – daily wine on the table and wine consumption during the lunch and dinner with my family, but were not sure what to buy, and were looking for guidance. They had not started to drink wine at home for lunch or dinner early on in their lives. They had not had a father or mother who taught them what a good and what a bad wine was. This guidance gave them Robert Parker and thus became the most influential and powerful wine drinker in the world.

This guidance could have given them somebody like the Brit Hugh Johnson. But they did not trust him. They wanted an American.

The Chinese Wine Boom and the Unsure Chinese Wine Drinker

Aren’t we in China in a similar situation?

The wine industry in China is developing at a remarkable pace. China could become the world’s largest producer of wine in 50 years time, experts predict.

China has a long tradition of producing all kinds of wine, but produced practically no vinifera wine before the economic reforms of the early 1980s. It now ranks 6th in terms of production, ahead of Australia, Germany, South Africa and Chile, almost at par with Argentina, which is in 5th place. The top four producers are France, Italy, Spain and the US.

The renowned Pauillac estate Chateau Lafite Rothschild, partnering with CITIC, China's largest state-owned investment company, is in the process of setting up a winery in China to produce grand cru wines there.

In terms of consumption, China was the eighth largest wine consumer last year, behind leader Italy, France and the United States in the top three spots. One of the main features of the China wine market, as supposed to western markets, is the predominance of red over white wine. Around 85 per cent of the wine drank in China is estimated to be red. However, as more Chinese women develop a taste for wine, white wine drinking is expected to rise relative to red wine.

At 0.4 liters per person a year, wine consumption is still quite low by international comparison. In France, where wine is culturally embedded, people drink 50 liters a year with consumption in Australia, another major wine producing nation, 25 liters and in the United States 15 liters. If China's per capital wine consumption was to only increase slightly because of the scale of the population it could easily shift the center of gravity of the world's wine industry.

Imports are small but growing. Consumers in China have very limited knowledge about wine. It is very difficult for them to assess the quality of either branded or even non-branded wine. Consumers still find the process of buying imported wine difficult because even in international supermarkets like Carrefour or Tesco there is little information on the label to tell them what the wine is.

Jeannie Cho Lee

Most likely, Chinese consumers will increasingly look for guidance when to buy wine. That guidance may be provided by somebody like the the Korean-born, Hong Kong-based Jeannie Cho Lee . She is a Master of Wine and the first Asian, among 300 wine experts around the globe, to have been awarded this prestigious title by the Institute of Masters of Wine in London. The recognition has landed Lee, currently a wine consultant to Singapore Airlines, sixth place on CNN Hong Kong's "20 People to Watch" list. Now, she's come up with a book. "Asian Palate" is the first comprehensive work to match Asian cuisine with wine. See here.

Picture: Jeannie Cho Lee's New Book

Regardless of whether it will be Jeannie Cho Lee, who will become the new Robert Parker or not, it will be an Asian, or more likely a Chinese who will provide guidance to the Chinese consumer the way Parker did for the Americans. It will not be a European or American for the same reasons as it was not a European who would guide the American consumers.

The taste of this person will play a huge role in the shaping up of the global wine market. Just as Robert Parker with his enormous purchasing power of the Chinese consumers, looking for guidance, in the back.

Schiller Wine - Related Postings

The Forbes List of Rich People and Wine

The Emerging Wine Giant China - Mouton Cadet Bar Opening

Trends in the global wine market: old world, new world, emerging wine countries

(German) Winemakers in the World: The German Roots of Baron Philippe de Rothschild
Emerging Wine Country: China's Wine Boom Since 2000

Picture: Trends in World GDP Shares, from Greg Mankiw's Blog

Within the past 40 years, the shares of the three main regions --- EU, USA and Asia/Oceania --- have converged to around 27 percent, with the US going steady, the EU falling by roughly 10 percentage points and the Asia/Oceania region increasing by this amount. If you do a trend projection, than you end up, say in 40 years, with something like on the left-hand axe, with the only difference that the top line at above 35% is Asia/Oceania and the line in the middle at 15% is Europe. There is a dramatic shift in purchasing power going on and will continue to go on, with implications for the wine market.

This is in broad terms the economic set up for the global village in which people consume and produce wine. Often, one distinguishes two groups of wine countries, Old World wine countries and New World Wine countries, but I think one should add a third category, Emerging Wine countries.

Old World wine countries comprise continental western Europe, with France, Italy, Portugal, Germany being the main countries. They are considered to be very much terroir driven although one is wondering what this means in the days of global warming. The President of the French wine makers recently predicted that if the climate change continues at the current pace, in 2050 the Bourgogne region will no longer be able to make its famous Pinot Noirs. The Old World will be terribly hit by global warming.

New World wine countries are the US, Latin America, Australia and New Zealand and South Africa. Not all of them are new comers. Latin America has been producing wine, and large amounts, for centuries. But it was all done for the local market. Sure, when the Spanish came, they wanted to continue to drink wine, but wine was not exported in a meaningful way and was not present in the world market. While most of the wine production in Latin America is based on Old World varieties, the wine growing regions of Latin America often have "adopted" grapes that are particularly closely identified with them, such as Argentina's Malbec and Chile's Carmenere (both from France).


Picture: Christian G.E.Schiller

Other countries, like Australia and the US are real newcomers. Here, the terroir concept is on the back burner and the grapes are at the center of winemaking. Also, these are all countries with warm weather and New World wines tend to be juicy, high in alcohol and fruity. Old world consumers tend to feel that there is too much hanky panky going on in the wine cellars of New World wine makers, but many of them have never seen a wine cellar in the new World with their own eyes but still continue to assume this.

Until the latter half of the 20th century, US wine was generally looked upon as inferior to European product; it was not until the surprising American showing at the 1976 Paris Wine Tasting that New World wine began to gain respect in the global market.

As for Australia and New Zealand, their wine product was not well known outside their small export markets. Australia exported largely to the United Kingdom, New Zealand kept most of its wine internally. South Africa was closed off to much of the world market because of apartheid, although in the 18th Century the largest exporter of wine to Europe was the Cape Province of what is today South Africa.

There is another set of countries that has started to appear in the international wine market or may do so in due course. These are the emerging wine countries. They are emerging for two reasons. Some of them are benefiting from climate change as the northern border for wine growing is pushing up. Others are emerging countries and with the general economic expansion, the demand for wine and the production of wine is also going up.

England is a prime example of an emerging wine country because of climate change. Many eastern European countries are emerging wine countries. Hungary has a long tradition of wine making and at some point in its history it was among the top wine producers of the world. But it lost contact to Western Europe as a result of the iron curtain and fell back, but is now clearly reemerging as major wine producer. Slovenia has reentered the international market quickly after the collapse of Yugoslavia in the mid-1990s and is producing now outstanding wines. Croatia is a bit behind, but has excellent potential. Serbia still has a long way to go. Poland has never been a major wine producer, but may benefit from climate change.

Another major emerging market is China, with a wine boom going on since 2000. China has emerged as the fifth biggest wine producer, mainly for domestic consumption, although Chinese wine has reportedly started to appear on the shelves of the West Coast of the US. On the demand side, the Chinese rich and famous have developed a taste for top French wines and are driving up the prices for them so that Lafite Rothschild for example has decided to set up a winery in China. China is projected to become the largest wine producing country by the middle of the century. On the other hand, China, where traces of wild wine dating from the second and first millennium BC have been found is clearly on the fast track and projected to become the world largest wine producer in some years.

Some of the New World and emerging wine countries are in fact very old. Archaeological evidence suggests that the earliest wine production came from sites in Georgia and Iran, dating from 6000 to 5000 BC. Georgia is one of the emerging wine countries following the collapse communism. Greece is another example with a long history, but only now emerging on the global wine market. Indeed, much of modern wine culture derives from the practices of the ancient Greeks. We all know, Dionysus, the Greek god of revelry and wine. Greek wine was widely known in ancient times and exported throughout the Mediterranean basin. The Greeks introduced the vitis vinifera vine to their numerous colonies in Italy, France and Spain.


Schiller Wine - Related Postings:

Emerging wine country: China's wine boom since 2000

New World wine country: New Zealand - facing the fate of neighboring Australia?

New World wine country: Chile and the Carmenere grape