How American wines can stay relevant in China

Debunking myths about Californian wines and driving premiumisation of wine exports are key to retaining American wines’ relevance in the Chinese market amid challenging times according to Christopher Beros, Asia director of the California Wine Institute.

Christopher Beros, Asia director of California Wine Institute, was in Hong Kong last week

American wine exports to China were met with the biggest setback to date when they became the target of the two countries’ escalating trade war, and were hit with increased punitive import tariffs just as the country’s wine exports to China including Hong Kong, Macau and Taiwan saw a 10% increase in 2017.

This inevitably put a dampener on Chinese importers and distributors, prompting some merchants to frantically replenish stocks before the tariffs took effect earlier this year. Others went on a de-stocking streak, wary of not being able to absorb import tariffs that now amount to 39% compared with the normal 14%.

In an effort to inject confidence into the Chinese market, Beros told dbHK this week: “I think wineries that are committed to China are committed to export and will continue to promote themselves in the export markets regardless what trade issues may exist because I think they are looking at [the] long term.”

As a trade association representing more than 1,000 California wineries, he said the California Wine Institute will continue to expand and deepen the trade and media’s knowledge of Californian wines with a series of seminars on the mainland in the coming months.

The main goal is to “challenge some of the myths that a lot of people believe” about California wines such as California wines don’t age or the generalisation of California being a warm climate wine growing region, he cited as examples.

“A lot of people have this misconception that Californian wines don’t age, and they age extremely well. A lot of people know Napa but they don’t realise Napa is only 4% of Californian wines and they don’t realise there are so many sub AVAs – Stag’s Leap, Howell Mountain within Napa,” he explained.

Speaking of another common misconception of California being hot and warm, Beros went on, “they think of California they think of warm climate, Cabernet, Zinfandel etc … but there are a lot of cool climate areas such as Sonoma Coast, Carneros, Russia River, Anderson Valley, Santa Lucia, Santa Rita Hills and Santa Barbara.”

Meanwhile, with increased tariffs, he believes that premium wines are less price sensitive, which means they are more likely to absorb price hikes.

“I think if you are a fine wine lover you are not going to be as concerned about whether a wine costs 600 RMB or 800 RMB if you are willing to spend that price point on the bottle of wine, you won’t care if a wine cost a bit more or less,” he continued but noted that he can’t speculate what’s in store over the coming months or individual winery’s strategies in China.

American wine exports to China – 90% of which are from California – were up 14% in value to US$38.4 million for the first six months of 2018, compared with the same period last year, according to figures released by the institute.

One Response to “How American wines can stay relevant in China”

  1. DTM389 says:

    It will be interesting to see these numbers for the second half of 2018 to see how tariffs are impacting the modest momentum that US wines are gaining in China. France and Australia have such a leg up over the US in China.

    I think the gentleman interviewed in this article is understating the price sensitivity of the Chinese market, as the most dynamic growth is happening in the $15 – $30 (USD) price point that is indeed price sensitive.

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