Northwest wineries seek growing Chinese market

Hong Kong and mainland China are developing a strong thirst for wine, and Washington and Oregon are hoping for a taste of those growing markets.

So far, only a trickle of Northwest wines make it to Asian countries outside of Japan. But experts say as affluence grows in China's booming economy, so will the demand for the finer things in life.

The recession hurt U.S. wine sales to most of the world last year, but not to Hong Kong, where the value of American wine imports jumped 138 percent to $40 million.

Most of that vino came from California, which accounts for about 90 percent of the nation's total wine exports. But the value of Washington's shipments to Hong Kong grew more than fivefold.

Washington's larger wineries have long cultivated customers in China and Hong Kong, and smaller exporters are seeking a foothold. Earlier this year, a delegation from Washington and Oregon signed a deal to promote wines in Hong Kong, their first trade agreement with that city.

"For our region, it's about being present, and you win by being there," said Al Portney, vice president of international sales for Ste. Michelle Wine Estates, which has been exporting wine to Hong Kong and China for years.

Portney said the Woodinville, Wash., winery pursues a methodical and long-term strategy showing that Northwest wines are high quality yet affordable.

While Ste. Michelle's exports to the region can fill a container on a cargo ship, Jonathan Ryweck, a one-man exporter of three Washington labels, ships a few pallets at a time.

"This is not a get-rich scheme, let me tell you," Ryweck said of his Port Townsend company, Transnational Ventures Inc. "It's growing very nicely but it's still real small volume and it's a tough sell."

Still, the Chinese associate foreign wine with success, education and status, he said.

"The Chinese love the taste profile of Washington wines," Ryweck said. "If you can get the product in their mouth, you can sell it."

Hong Kong's wine imports have soared since it eliminated an 80 percent excise tax in 2008. The U.S. Department of Agriculture says it imported a record $491 million of wine last year. Most came from France, but the U.S. accounts for 8 percent of those imports.

Hong Kong is now the fourth-largest export market for U.S. wines behind Canada, the European Union and Japan, and it's a major re-exporter to the Chinese mainland and other points.

Last year Washington exported about $9.7 million in wine, but just $721,000 to Hong Kong and $414,000 to China, according to figures from Global Trade Information Services Inc. cited by the state Agriculture Department. Exports to Hong Kong jumped 529 percent, however.

Figures for Oregon are sketchier, but the USDA says in 2009 the state exported 1,355 cases to Asia outside of Japan and South Korea. That's minuscule compared with the 1.6 million cases its wineries shipped in the U.S.

Most Oregon wineries are family affairs that sell domestically, said Katie Bray, Oregon Wine Board export manager. A small but eager group is interested in exports, and China has great potential, she said, but the board's limited promotional money is focused on the major foreign markets: Japan, the United Kingdom and Canada.

Watson's Wine Cellar, Hong Kong's largest specialty wine chain, does sell Oregon's Erath and Argyle wines, however.

"All of a sudden there's an interest in Northwest wines," said Argyle winemaker Rollin Soles. His Willamette Valley winery produces 40,000 to 45,000 cases a year and has shipped about 200 cases to Hong Kong's largest specialty wine chain, Watson's Wine Cellar, in the past six months.

He sends only his top wines - putting the "best foot forward" to build the region's reputation.

Chinese on the mainland drink about 75 million cases of wine a year, said Richard Halstead, chief operating officer of the British consultancy Wine Intelligence Ltd. But 90 percent is domestically produced wine "that most wine consumers in other countries would struggle to recognize as the product they drink," he said.

Foreign sellers need to guide new consumers on types of wines and how they taste, Halstead said.

"Chinese consumers are confused by wine," he said in an e-mail. "This is hardly surprising: most Western consumers are, too, and they don't have to deal with a totally alien script when trying to decipher what's on the label."

Wine Intelligence estimates the number of Chinese who drink imported wine - those that can part with $20 or more for a bottle - will grow to about 50 million in 15 years, nearly the number in the U.S. who now drink imports.

The average salary in China's urban areas is $356 a month, according to the latest figures from China's National Bureau of Statistics. But the country's new affluence is staggering, and the desire for wine is rapidly spreading beyond the big cities, Portney said.

He and Ryweck see similarities with this country. The U.S. had a "hard liquor and beer culture" until World War II, when GIs brought a taste for wine home from Europe, Ryweck said. By the 1970s, there were countless good domestic and imported wines on store shelves.

Millions of Chinese work or study overseas and bring home what they learn, Ryweck said. "They're changing Chinese society and part of that is wine culture."

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