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Two headlines interwove late last month. The first was an Associated Press story about Northwest wineries working to expand their presence in the Chinese market. The second was the report of China becoming the world’s second largest economy. Can Washington wineries get a lift from China, especially in difficult economic times? Here is why they must, if not now, then soon.

As Washington emerges onto the world stage as a wine region, the state’s wineries must expand their reach both nationally and internationally. The current recession has shown the importance of diversifying markets. To wit, while the recession has hurt U.S. wine sales in many areas of the world, sales have been increasing in recent years in China and Hong Kong. However, last year exports of Washington wine amounted to $9.7 million with about $1.1 million going to Hong Kong and China. Both numbers need to improve.

While the current export numbers are low, the upside in China is high. Jill McCluskey, Ph.D. of Washington State University says of China, “There are huge opportunities because there is such a large population and the income is rising quickly. There is currently low wine consumption, so there is a lot of room to grow.” At present the average wine consumption in China is one fortieth of what it is in the United States. However, as China’s economy grows, the population’s interest in wine is growing with it. While Chinese consumers are focused largely on French wine at present, McCluskey’s research indicates impressions of wines from the United States can be improved with education.

Top Cellars of Washington is one of a handful of exporters of Washington wine to China. The company represents of a dozen different brands, including Barnard Griffin, Walter Dacon, Bunnell Family Cellar, and others. Much of the company’s work thus far has focused on education and brand building. This has involved supporting numerous events that grow awareness of Washington wine, such as a visit to Hong Kong by Commerce Secretary and former Washington State Governor Gary Locke earlier this year. Sommelier Doug Zellers says, We’re real grass roots at the moment. We have two people in the entire country. There are a whole lot of expenses incurred and not a lot of money coming back at the moment.” Still, Zellers is bullish about the prospects.

Cole Sisson, sommelier and wine buyer at Seattle’s The Local Vine, has spent time studying the Chinese market, particularly what has made the French wine industry successful. Sisson says, “One thing that comes up repeatedly is the French model of creating a long-term plan for business. This isn't necessarily the American forte. We want results now.” Sisson also feels the Washington wine industry’s limited presence in China at present is a hindrance. “It seems to me that this state could use more feet on the ground, nurturing existing relationships, building new ones, pouring wines, and building a presence. It's going to take a long time, but the more people who are building the Washington brand and immersing themselves in the local culture (markets), the better the prospects for increasing future business.”


Sisson, who is currently enrolled in Mandarin classes, believes a key to growth will be "a determined effort to study Chinese culture and ideology before setting up a business plan. First figure out how your customers think. Then ask them if they'd like to buy your wine."
Zellers believes that pooling efforts will be the key to success. “It’s a big country and we can only become better at this if we work together,” he says.

While the upside in China is large, there are numerous obstacles to surmount. Prices for wine double by the time they arrive in China. This makes it essential to work with larger volumes to minimize costs. Regulatory issues can also be a challenge. Zellers recalls one instance where label regulations changed while a shipment was in transit. The wines had to be relabeled upon arrival. To help mitigate the numerous issues, larger wineries and the Department of Agriculture must take the lead to make it easier for smaller wineries to follow.


The
Washington Wine Commission is working with state and federal agencies to foster growth in China. Executive Director Robin Pollard says these efforts are starting to pay dividends. “We have seen a steady increase in sales and distribution in both the Hong Kong and China wine markets and have worked to see that growth continue. There are great resources that wineries can take advantage of both at the Washington Wine Commission and other partner agencies to help gain access to these markets," Pollard says.

Among the recent progress, Washington and Oregon recently entered an agreement with the Hong Kong Commerce and Economic Development Bureau to promote the sale of Northwest wines. Additionally, this week Washington State Governor Christine Gregoire will be attending a two-day event in Shanghai to promote relations. The event will feature Washington wine among the state’s products.

Ultimately, creating a Washington wine presence in China can only be accomplished with a concerted, coordinated effort on the part of the states’ wineries and the federal and state governing bodies. While the investment in long-term brand building will be large, the payoff potentially is substantial. If Washington is able to establish itself as more desirable – dare I say exotic? – than French wine, the state may be able to capture the imagination of a large population whose interest in wine is increasing.

Although selling wine to the Chinese market is not a magic bullet for increasing wine sales, two things seem clear. China will only continue to grow as an economic force in the coming years. Washington wine, if it is to continue to grow and compete with the world’s major wine regions, must find a market there.

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