Global Economics

Potations From Chairman Mao


If Shanxi province ever makes the news, it's usually because of a tragedy at one of its thousands of coal mines, or perhaps the pollution from the power plants they fuel. But Chan Chun Keung wants to put Shanxi on the map for another reason: its wine. The Hong Kong-based entrepreneur has built a $5 million winery in the village of Dongjia, 30 miles from Taiyuan, Shanxi's capital. His Grace Vineyard ch?teau is surrounded by vines heavy with grapes ripening in the autumn sun, nearly ready for his Italian presses and fermentation tanks and oak barrels imported from California, France, and Hungary. "It's my dream to introduce good wine into China," says Chan, who made a small profit last year on the half-million bottles he produced.

Wine making in China's coal belt? Well, Shanxi is on the same latitude as France's Bordeaux region. It has a similar climate, and its soil mix of silty loam and small amounts of clay make it ideal for growing cabernet sauvignon, Chardonnay, and merlot grapes. Although China has little tradition of wine drinking -- locals prefer a fiery grain-based spirit called baijiu -- consumption is picking up. While the rest of the global wine market is stuck in the doldrums, China's has grown by an average of 11% annually for the past five years, to 410 million liters in 2005, estimates London consultancy International Wine & Spirit Record.

China's tipplers are an abstemious bunch compared with their Western counterparts. Per capita wine consumption works out to about two glasses per year, while Americans drink some seven liters each annually, and the French quaff 55 liters apiece. "There is gigantic potential for development," says Robert Luc, a board member for Dynasty Fine Wines Group Ltd., China's No. 2 producer, which aims to ramp up its production from some 38 million liters last year to 80 million by 2010.

The budding market has winemakers from around the world putting down roots. All told, China now has more than 100 vineyards, including many associated with some of the biggest names in the business. Paris-based R?my Cointreau has a 26% stake in Dynasty, based in the coastal city of Tianjin. Austrian crystal group Swarovski has spent $30 million building the Bodega Langes Co. winery in central Hebei province. France's Castel Group has a joint venture with China's largest winery, Yantai Changyu Pioneer Wine Co., based in coastal Shandong Province. Robert Mondavi Group imports California wine in bulk for bottling under its label in Beijing.

MYSTERY LABELS

Chinese vineyards can make surprisingly good wine. Grace's $10-a-bottle Chardonnay has melon and baked apple flavors, and its $80 Chairman's Reserve -- a blend of cabernet sauvignon, merlot, and cabernet franc -- is complex enough to rival many top-quality Bordeaux. While the overall quality of Chinese vintages is still mixed, "some wineries are making agreeable wines that are good to drink and taste like very rustic Bordeaux," says Lau Chi Sun, editor of Hong Kong-based Wine Now Monthly and an occasional consultant to Grace.

One concern is that China lacks any formal system of control of origin like those in France and Italy. That means drinkers have no way of knowing whether a bottle actually comes from, say, Shanxi or Hebei province -- or someplace much farther afield -- regardless of what the label says. In fact, many wineries import bulk wine from Chile, Spain, or Argentina, paying as little as 50 cents a liter, then slap a Chinese label on it.

Even as vineyards work hard to boost quality and educate Chinese drinkers, it may be some time before mainland vintages start clinching top prizes in international tastings. While China has developed other industries at warp speed, there's no way to hurry newly planted vines into maturity.


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