"Bordeaux holds a special place in China," said Don St. Pierre Jr., chief executive at ASC Greater China, the largest importer of premium wine in China, in an email to AFP.
"I do not think there is any region in the world that competes with Bordeaux, none are viewed to have the same history or pedigree."
Bordeaux merchants have been criss-crossing China for years but saw their efforts translate into orders only recently.
"China has become our first client outside the European Union," Alain Vironneau, president of the CIVB, Bordeaux's wine trade body, said last week, hailing both Hong Kong and China as "dynamic".
China's buying power comes at a particularly opportune moment for France's leading wine region. Figures last Friday show overall exports down 23% in 2009.
"The wine boom in China started three years ago and grows each year at an impressive rate," wine merchant Jean Pierre Rousseau, Managing Director of Diva, told AFP.
"Before that it was Lafite, Lafite, Lafite. Now they buy petits chateaux, crus bourgeois and grands crus in volume."
"Several hundred vineyards are in peril due to insufficient cash," said Vironneau, emphasising that many of these small businesses were outstanding performers but lacked support from France's banking sector.
"The crisis that the wine sector is going through is tied directly to the economic crisis."
Despite a slight increase in export sales over the last three months, Vironneau said 2009 had been "catastrophic" for the region.
Bordeaux exported 206 million bottles in 2009, generating €1.29 billion (US$1.8 billion). This represents a 14% drop in volume and a 23% decrease in value.
The hardest hit markets were some of Bordeaux's most trusted, the United States, Britain and Belgium, which dropped 44%, 33% and 16% respectively.
"We've never seen such a rapid and brutal collapse," said Roland Ferendj, the CIVB's general director.
While the US still outpaces China in terms of value at €139 million, it slipped to the number five position in volume, surpassed by China, where consumers are rapidly integrating wine into their urban lifestyle.
"Chinese consumers fall into two groups, buying for themselves or as gifts," said Ma Lin, director of the Chinese branch of Cafa Formations, a Bordeaux wine school.
"The people who are buying for themselves have lived abroad, like the arts or are looking for a classier life in China. But many are buying for their relatives or friends."
In 2009, sales to China increased by 40% to €74 million, with volume increasing by an impressive 97%.
"Most of the volume growth of exports to China from France is happening at the entry level or lower end of the price range," said St. Pierre, who has 800 employees and offices in 10 Chinese cities including Hong Kong and Macau.
"The better quality brands and wines have not seen big increases."
Domestic plonk, often blended with foreign bulk wine, still corners 88.2% of the Chinese market. But over the last five years, domestic premium brands have arrived on store shelves.
"This is a positive trend for the future," said St. Pierre. "Eventually the restaurant owner and retailer will want better quality imported wines as a substitute for the highest priced local wines."
Hong Kong, on the other hand, is filling its cellars with grand crus.
"Hong Kong is very different (from China), with the abolition of all tax on wine (in 2008), demand has increased for better quality French wines, although this is primarily driven by retail and direct sales to consumers," said St. Pierre, noting that on-trade sales suffered in 2009.
In 2009, Bordeaux exports to Hong Kong increased 46% to €109 million, with a 24% increase in volume. And 2010 looks bright.
"We expect further growth for 2010, around 50%," Doug Rumsam, Managing Director of Bordeaux Index (HK) Ltd.
"The market out here is growing very rapidly and the emergence of so many new buyers keeps prices rising and demand strong."
Prices have reached a frenzy on the Hong Kong auction market, where Bordeaux's legendary wines come under the gavel, according to Linda Sansbury of the Hong Kong Economic and Trade Office.
In 2009, 14 fine wine auctions raked in an aggregate €45 million, outstripping London and placing it second only to New York - but not for long.
"The industry believes Hong Kong will overtake New York this year to become the largest wine auction centre in the world," Sansbury said in an email to AFP.
But Hong Kong has also emerged as an illicit backdoor to the mainland.
"The reality is that Hong Kong has become a important wine hub, but if you dig a bit deeper it has also become a huge smuggling hub into China," a major importer told AFP. "The reality is that most of the expensive wines being shipped into China are being done so without the payment of proper taxes. The Hong Kong government says this is not their problem."
Wine fraud and non-payment issues also raise the risks, but Bordeaux remains undaunted. The leaders have opened Asian offices.
"It became clear that we needed somebody 100% dedicated to the region," said Valetine Bourrie, head of Asia for Chateau Cos d'Estournel. "It represents of course a huge budget of promotion and marketing."
And the Chinese are quickly gaining credibility in another area.
Chinese wine schools are flourishing. Ma Lin has trained 300 wine professionals in five cities in six months. The CIVB, through its office in Hong Kong, has over 50 accredited Bordeaux Wine School tutors, each training 200 students a year.
"The speed at which Asians are learning about fine wines is amazing," said Herve Berland, executive director of Chateau Mouton Rothschild. "When they do something in Asia, they want to do it well. They have a natural sense of perfection."
Source: AFP
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