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In Vino Veritas Part 11 - Let’s Talk China

Here’s a new spin on this week’s focus on China. Here’s how they do with wines and what this means to you.

Wednesday, July 09, 2014
Mr. Larry Mogelonsky
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Through my wine studies, one curiosity I’ve stumbled upon pertains to China. That is, the nation of over one billion people and rapidly proliferating wealth is starting to consume a lot of wine. Not only that, but China currently stands as the fifth biggest grape wine producer in the world (most for internal consumption), and yet they are still only in the infant stages of developing their own internal haughty viticulture and prize-worthy vintners. This is an article to more-or-less give you an update on where China stands in the winemaking scene and how their emergence will impact worldwide prices and distribution.

In terms of per capita statistics, China currently rests pretty far down the list at roughly 0.15 liters per capita per year. Although this ratio pales in comparison to countries where wine is life (France, Italy and Portugal as examples), when it comes to China you always have to consider the sheer scale of the country. France’s population sits at 65 million, Italy at 60 million and Portugal at 10.5 million. China has 1.35 billion people; approximately ten times that of France, Italy and Portugal combined. If wine culture catches on in China, even by just a little bit, we are talking colossal increases of consumption.

And this is already happening. China has grown quite the voracious appetite for imports, chiefly from prestigious winemakers in France, Italy, Germany and the US. Think the big, eminent chateaus: Pétrus, Cheval Blanc, Mouton Rothschild and the classic Burgundies like Romanée-Conti and its cohort. Now these ‘name’ examples are just for France, but if you know these bottles then you know the caliber we are talking about.

The continued presence of a gigantic fine wine buyer and consumer like China suggests, through straightforward supply and demand, that worldwide prices are bound to increase, especially at the upper end of the market which is being yanked into the stratosphere. If you’re scouting for evidence of this budding trend, look no further than Sotheby’s with its Hong Kong location reaping huge rewards from this incredible rise in Chinese demand.

On an individual property basis, these sorts of macroeconomic analyses will probably have little impact in the short run, especially since this gross inflation affects Chinese domestic prices more so than wholesale elsewhere in the world. Just don’t be surprised that the lurking aftershock of China’s heightened consumption causes the entire market to float upwards as well. I say lurking because it will be a slow, years-long effect, but it will nevertheless impact your bottom line.

Perhaps now is the right time to explore the bevy of new growers and regions reaching maturity? These are factors which are simultaneously acting to buffer the supply side of things and, from their perspective, capitalize on the mounting worldwide demand. Moreover, given the abundance of flying winemakers and knowledge sharing via the internet, it is now easier for a grape producer or vintner to perfect their technique in a shorter time span. These wandering internal dialogues on the current state of wine quickly segued into a more encapsulating rumination about the Chinese consumer and what appeals to them.

With this nation’s increasing affluence comes more outbound travel and more expendable cash for such luxury items as mid to top tier alcoholic beverages. What libations are popular with Chinese patrons? Are their actions abroad similar to how things are going at home? And more specifically, how can you better appeal to Chinese guests through a more engaging wine list?

Starting broad, there are many other alcoholic beverages that compete with wine for top esteem in mainland China – mainly beer (Tsingtao), baijiu, whiskey, brandy and rice liquors. Stocking just one of these mainstays might help to ease native Chinese guests by giving them a stronger sense of home when visiting a foreign land, thus formulating better impressions of your hotel. Then think of it the other way around. You are traveling in China, and with so many unfamiliar food choices, wouldn’t it be somewhat calming to see a burger or a pizza on the menu once in awhile?

Current polls show that China’s appetite for foreign wine currently only extends to reds. My first suggestion is therefore to ensure that your wine list has a robust selection of reds from wine-producing nations known to be at the top of their game (in the same vein as those abovementioned). This may seem prejudiced against white wines, but it’s simply where the demand presently is. Plus, through my many red-versus-white arguments in the past, the general consensus is always that red pairs better with more meals, especially those with a meat or poultry main or a rich sauce.

From a purchaser’s perspective, China’s homegrown wineries are still too far in their adolescence for me to recommend a hearty investment for your cellars. Right now, a ‘Chinese wine’ on the menu is likely to be chosen more out of novelty than out of quality. But, as is the case with nearly every other industry, this booming nation is rife with fast learners and hard workers, so expect their producing regions to be making an increasingly significant impact on the world stage as the grapevines and vintners reach maturity over the next two decades.

It’s important to also remember that like any other cosmopolitan jetsetter, Chinese travelers are looking to live the new and experience the unknown. Give them an authentic localized experience through your wine list and pairing choices, and you will undoubtedly see a strong appreciation for your F&B efforts. As well, offering one or two liquor options that are ‘cross-pleasers’ – those that appeal to Chinese consumers as well as those from another large demographic – may work better than dedicated attractors.
Larry Mogelonsky    Mr. Larry Mogelonsky
Managing Partner, Hotel Mogel Consulting Limited
Owners, Principals, or Partners
Hotel Mogel Consulting Ltd.

Bio: The world’s most published writer in hospitality, Larry Mogelonsky is the principal of Hotel Mogel Consulting Limited, a Toronto-based consulting practice. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also on several boards for companies focused on hotel technology. His work includes five books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” ...
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RE: In Vino Veritas Part 11 - Let’s Talk China article link
Fascinating read and great information.
Posted by: Pam Scott
Email: pam.scott@redlion.com

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