Based in Hong Kong, Thomas Jullien is in charge of the promotion of Bordeaux wines in Asia and mainly China for the CIVB.

What is your precise role on the Bordeaux wines sector ?

My role is to develop marketing and to represent Bordeaux wines vis-à-vis Chinese authorities, to protect sales on the market and to work on action plans with local agencies. Six years ago, we sold ten or so AOC of the sixty or so available, only reds, no whites, hardly any sweet wine; our range is wider today, covering all colours and with a nice growth on the Côtes, even though we are mainly selling Médocs, more of a left bank type of wine, châteaux with a good reputation, readily trusted by consumers.

Responding to strong competition, importers try to take some distance by digging out the lesser known appellations. They used to mainly look at the label; they now know their clientele, taste the wines and know what can please them. They really increased their knowledge, some of them going as far as to training their clients, and they need wider information and explanations. Those joining our training sessions do not hesitate to fly for 4 hours to come to see us. Those who have been living in the larger cities for a long time know how to store wine correctly. It is undeniable, however, that some importers act as opportunists taking advantage of the wine boom, but not knowing how to explain, sell or store it. Within China, the notion not to forget is who you are speaking to and with whom you are dealing.

How did consumption evolve in China over the last years?

The Chinese still taste with their heads. They know the classifications and trust them. They like wines that are well balanced, not too tannic. They usually drink them during banquets, often to replace Baijiu and in a very ritual way, as toasts and in one shot. We follow the same ritual for wine with two or three toasts before explaining how we drink wine in France. Chinese authorities in fact support the replacement of baijiu at 53% by wine at 12-15%. Consumption also occurs outside of meals, in the wine bars of Peking, Shanghai or Canton.

In karaokes, it is mainly low-end wines which is drunk. Wine bars favour a good price/quality ratio, specially in the main cities. In Singapore, the structure of taxes is rather clever: not an ad valorem tax, but a fixed tax of 1 or €2  per bottle, which prompts the consumer towards the high-end products and indeed, little table wine is to be found. Wine has a very enhancive value which can impact on tourism for a Chinese clientele who come to buy wine and luxury goods.

The Chinese invest more and more in their home production of wine. Are they really competing against imported wines ?

The Chinese import a lot of bulk wine… to produce Chinese wine. Some reds are beginning to be of interest. Middle-range wines are of a more constant quality as investors have created the means, in the Ninjxia region, for instance, where Pernod Ricard invested, but the vineyard needs to be buried and its life span does not exceed 15 years… making it difficult to create great wines. The Chinese do have the advantage, however, of low labour costs, even if one needs to go and find them in the distant desert regions and if salaries are increasing rapidly. Right now, operators are buying bulk to sell brands without consistency.

In China, many projects tend to disappear as soon as they appear, such as this vast facility on 170 acres just outise of greater Shanghai, a leisure park on wine launched with great noise in 2011. Following the laying of the foundation stone, much of the work stopped. As in the United States, we may see many consumers prefer a national product and pay more for an average quality wine, more expensive than their French, Italian or Spanish counterparts, for an equal quality.

In the short term, this will most certainly induce the creation of volume brands in which investors will invest to improve quality. The recent threats against European wines occur within the scope of a complex global economical war. A study is being run with the Ministry, but decisions take a long time and will be taken while taking into consideration other issues such as solar panels or telecommunications.

Is there really a large number of consumers of wine in China ?

There are apparently 30 million consumers of wine in China, 20 million of whom drink imported products. The Chinese have apparently drunk 1.2 billion bottles in 2011, a 15% increase over the previous year. But these figures are difficult to validate in the country as methodologies are diverse and not always very serious. It is undeniable, however, that consumption is growing. Be it only by means of the increasing presence of wine in Chinese restaurants. Shipping may not always mean consumption, however, as storage occurs at every level. In any case, the wine universe is indeed buoyant ; bottles are often used in advertising for cars or banks, in TV programs or in TV serials, often to express moments of sharing or romantic moments.

China would therefore be an Eldorado for French producers ?

We are coming out of a phase of euphoria which worked as a smokescreen, making everyone believe that there would be room for everyone. The Chinese market is difficult and many mistakes are made, including by major corporations. Selling 10,000 bottles is not an easy job, except by sending a container and forgetting about it all. One has to travel at least four or five times to understand the needs of partners, to evaluate their willingness, to check on the durability of the company. The ideal situation is to have somebody on the market. International Voluntary Service may not be the best way as, by definition, this is reserved to the juniors who need to be well managed within a team.

It is better to come regularly and to find a good Chinese partner to translate and explain how the market operates, to serve as a filter. One also needs to take another rhythm: In France, we work on longer schedules, but we make plans and get organised; in China, the answer may come quickly, but things are done at the last minute as cheap labour is lacking and clients call you at night or over weekends, without understanding why you are not answering.

Are Bordeaux still the darling of Chinese consumers ?

In spite of the fact that referencing of wine from everywhere around the world has increased over the last years in China, including a few boxes of Greek and Bulgarian wine, Bordeaux, after six years of action, have increased faster than the market. This is an unusual tendency as it is not usually the leader who gets reinforced when the market becomes more mature. We have been able to find the sources of growth through a geographical expansion of distribution, the rate of growth in the other regions being all the stronger as it starts from a very low point.

The few Burgundies recently sold on auction are not going to reverse the tendency and I do not believe in a brutal change of consumption. Bordeaux represents one out of every four imported bottles. If the big Chinese companies invest in Bordeaux, this implies a long term dynamic through a real community of interest.

12% Bordeaux, in volume and for 2011, for wines imported to China, bulk included (out of 35% of French wines). But one imported bottle out of four. Bordeaux reds: +39% year to date at end of June (source: Customs), Bordeaux whites: +25%. China is the first importer of Bordeaux wines between €2 and €3/l (28% of exports) ahead of Great Britain (14%).

CIVB now has a website in Chinese with a continuous digital strategy. It sponsors festivals, private viewings, restaurant events (banking on food and wine pairing, always in a simple and playful manner), tasting competitions within universities with MBA’s…

CIVB organizes blind tasting sessions every year with local experts on 500 to 600 wines to select about a hundred, between €8 and €25, already distributed by importers. A selection is used for the training of trade operators in Peking, Shanghai and Chengdu. CIVB works on consumer events in the cities of the first third (see RVI September 2012), on training for the second third and only with professionals willing to understand wine for the final third, where distribution is also beginning to grow.

November 2012