When New Food - official media sponsor for the 86th China National Food, Wine & Spirits Fair - invited me to speak at its gala dinner in Chengdu last month, I was immediately interested. Many China-based wine professionals had told me it was the largest and possibly the most important fair of its kind on the mainland. Since it is supported at the national level, the scale is huge and wine vies for attention among a host of local alcoholic beverages.
The magazine, one of the largest wine and drinks publications in China, devotes about a quarter of its coverage to wine; the rest mainly covers local spirits.
'It makes sense for us,' says Yang Zhengjian, general manager for the publication's wine business. 'Seventy-five per cent of our revenue is from local spirits so we need to devote more editorial coverage to it.'
Yang seems determined, however, to shift that balance in favour of wine. When he joined the magazine in 2007, he says that Carruades de Lafite (the second wine of Chateau Lafite Rothschild) was selling wholesale for 600 to 700 yuan a bottle. His contacts in the wine industry all told him that Lafite and Carruades were selling like crazy and demand was exceeding supply. He wrote a story in October 2007 predicting that Lafite was going to get very popular. Sure enough, over the next four years, Carruades shot up in price and, at its peak in China, it was trading at 4,000 yuan a bottle.
The Chengdu fair provides insight into the heart of China's wine industry. Merchants from all over the country arrive not just to do business but to find out the latest trends and insights into the industry.
According to Yang, there are at least 30,000 wine merchants in China doing business at the retail, wholesale and distribution levels. People have swooped down on this industry with the belief that there is easy money to be made, given wine's popularity. The competition is fierce and many are struggling. Yang says: 'Many importers are dying. They are discounting and selling without profit.'
Competition is growing and the scenery is changing quickly from the time when foreign-owned importers such as Montrose dominated the market. Home-grown companies such as C&D rank among the top 10 importers now in volume and are poised to grow even faster than the likes of long-established Summergate or ASC.
