Unfiltered with Castle Li of COFCO

How would you comment on COFCO Wine & Wine’s performance in 2017? 

Our performance was quite good: our sales grew about 120%, and we have added new brands to our portfolio including Santa Rita and have also hosted the Great Wines of the World event with wine critic James Suckling. For us, it was a great year to consolidate our base. We have grown in terms of portfolio, team member, distribution network, and I believe that in 2018, we would grow even further,

How many wines you imported in 2017? 

We imported about 10 million bottles of wine, compared with 2016’s 7.5 million. We surpassed ASC officially in 2017, and in 2018, the lead is expected to be more obvious.

How did COFCO Wine & Wine perform during the massive Singles’ Day online sale [on 11 November]?

Compared with last year, our sales increased 680% in value.

Problem of counterfeit wines looms big in China. How does COFCO deal with it? 

This is something we care about very much. It provides an opportunity for us, but it’s also a challenge. There’s a big mix of wines out there in the market, and we guarantee authenticity for the wines we sell. This is also why our Lafite and Penfolds wines sell so well, because consumers trust COFCO. In order to guarantee our wines’ provenance, we source our wines directly from châteaux or wineries, so no middle man, not to mention smuggled wines, not even one bottle. In addition, from sourcing to storage, we monitor the whole process. Once wines are in our warehouse, we will slap on our own slip for anti-fraud purpose, and recently we have just upgraded our anti-fraud technology. Moreover, in September, 2017 COFCO and China National Association for Liquor and Spirits Circulation have formed an alliance with distributors to pledge only to sell authentic wines. We united all the major distributors nationwide, and COFCO alone invested RMB 10 million (US$1.55 million) into this as an incentive to reward distributors.

What about counterfeit wine for domestic brands? 

Frankly, in the past 30 years, we always had problems with fake wine. We have a team specially working on combatting counterfeit Great Wall wines. Our wines are almost ubiquitous in each village and town, probably with better distribution coverage than Moutai. Five years ago, the Great Wall brand was probably more influential than any imported wine brand. Great Wall’s production capacity is 150 million bottles a year, and we take about up 30% of domestic wine market share.

How many members are there in the alliance?

Chateau SunGod wines

We have around 100 members and standing members. To be a member, the distributor’s annual purchase order has to be over RMB 1 million (US$154,700), and RMB 3 million (US$464,000) for a standing member. All of them are the biggest and most influential distributors across provinces and cities in China.

Do you think in the next 10 or 20 years, there would be a globally renowned Chinese wine? 

We invited James Suckling, Peter Gago (of Penfolds) and Edward Chadwick (of Viña Errazuriz) to our SunGod winery, and they all spoke highly of it. If they have to rate the wines there, no doubt they will get 90 points or above. I can use one example to explain Great Wall’s wine quality. We have a vineyard in Ningxia, and the vines are still young, about six to seven years old on average. I tried a Cabernet Sauvignon and was really impressed with the quality. We have about 20,000 mu (1,333 hectares) of vineyards in Ningxia, all estate grown. I have tried Ao Yun before, but this wine [from Great Wall’s Ningxia vineyard] is very promising. Given time, we can definitely make great wines.

Is Great Wall exported enough? 

Not really. In the past, we lacked marketing, but we are actively changing that. In March, we will be exhibiting at ProWein in Düsseldorf, and in May we will be at Vinexpo in Hong Kong as well. Then we will be rolling out a comprehensive export road map for Great Wall. We really want to introduce Great Wall to the international stage. Wine is a cultural product and it has be communicated. We can’t isolate ourselves any more. This is also why, as I said before, major Chinese wineries like us have to really lead China’s wine industry. Great Wall represents China, Great Wall wine should be the most representative, influential Chinese wine as well. More recently, you have heard talks from China National Association for Liquor and Spirits Circulation, local governments in Ningxia, Shandong provinces resonating with this idea as well.

The first internationally traded Chinese wine on Liv-ex is Ao Yun from LVMH. What do you think of that? 

To be frank, before I took over Great Wall winery I visited Ao Yun in Yunnan, a personal trip actually. I inspected their vineyards and winemaking facilities and stayed there for one night. The conditions there are indeed quite challenging and vineyards are quite spread out. Ao Yun is not the first Chinese wine to be internationally recongnised. Many Chinese wines have won awards abroad but marketing efforts are not there yet. Ao Yun, however, is a good start, and generated interest for Chinese wine.

Wine critic James Suckling holding a bottle of Chateau SunGod wine in Beijing

China’s domestic wine production has been declining for the past few years now. What do you think is the leading cause for decline? 

Imported wines will inevitably have some impact on domestic wines especially in the early stages. I think this is a good thing. Relaunching a Chinese wine brand [like Great Wall’s Chateau SunGod] to some degree marks a new start for the domestic wine industry. The rise of Great Wall will usher in changes for the whole industry. China is a big country and we have quality winemaking regions, sound winemaking facilities and can produce good wines, but only if you are willing to embrace competitions from other international brands.

You have to change your close-mindedness. This is similar to Napa as well. It only took 30 or 40 years for Napa to gain international recognition, so you see it won’t require 100 years. Also, some international rules can restrict wine industry’s development, and relatively New World wines don’t have too many constraints. In the past, when we spoke of fine wine, we thought of France, now it’s a much broader concept.

How many vineyards does Great Wall have in China? 

We have wineries in Ningxia, Hebei, Shandong and Xinjiang provinces. I have to say the winery in Shandong’s Penglai is the best managed winery by far. We have the largest vineyard of Marselan, a grape that is quite compatible with China’s northeastern region where rainfall is slightly higher. The vineyards compared with the ones in Ningxia, do not require burying in the winter and we have been making wines there for 20 years.

 

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