SHANGHAI (AFP) — Wine producers are pinning their hopes for growth during the financial crisis on a country that only recently entered the ranks of the world's top ten wine drinking countries -- China.
Wine bars and speciality wine stores have flourished in Shanghai, which prides itself of being the nation's most cosmopolitan city, and have quickly become part of the landscape.
"More and more people are coming through the door, especially after a dinner with friends," said Marc-Antoine Malia, head of sales and marketing for Enoteca, a small chain of wine bars in Shanghai and Beijing.
No longer a luxury just for foreigners, wine has become a status symbol among China's fast-growing middle class.
"China was one of the ten biggest wine consumers in 2008 and should be ranked number seven by 2012," said Xavier de Eizaguirre, president of Vinexpo, the world's biggest wine and spirits exhibition, which takes place in Bordeaux in southwest France.
Producers are paying more attention to the Chinese market as the economic crisis squeezes demand in developed markets, de Eizaguirre said.
"Very few emerging markets have the kind of potential we see in China," he said during a visit to Shanghai.
Domaines Barons de Rothschild, one of the great names in wine-making, recently announced plans to develop a vineyard in China to take advantage of the growing interest.
The owners of the famed Chateau Lafite label will plant the vineyard on 25 hectares (62 acres) on a peninsula in eastern Shandong province.
"It is particularly exciting to participate in the creation of an exceptional Chinese 'grand cru'," Eric de Rothschild said in a statement.
Alain Castel, director general of the Castel Groupe, France's largest producer by volume and number three in the world, said winemakers cannot afford to ignore the Chinese market.
"It is in full expansion and what is happening there is very important. We have seen 300 percent growth between the first four months in 2008 and the first four months of 2009," he said during a visit to Beijing.
This year his group hopes to sell more than 12 million bottles in China, he said.
In 2007, Chinese wine consumption topped 800 million bottles, according to Britain's International Wine and Spirit Record Institute.
Between 2003 and 2007, wine consumption in China grew 61 percent and is expected to grow a further 36 percent between this year and 2012, according to the study.
Winemakers see tantalising potential, considering that average annual consumption in mainland China is only 0.6 litres of wine per person, compared to 2.9 litres per person in Hong Kong, according to the institute's study.
Red wine has been the most favoured by Chinese palates, but it is losing ground to white, sparkling wines and even rose wines, the study said.
And Chinese wine drinkers are becoming increasingly adventurous.
"Chinese have come a long way in being open to trying new wines," said Vance Yeang, sommelier at Napa Wine Residence, a Shanghai restaurant that allows valued customers to store wines in private cellars on the premises.
"Customers are moving more and more away from Bordeaux," said Matthieu Magery, head of operations at Enoteca.
French wine has long been a classic for novice wine drinkers who rely on its reputation.
Australian wines also sell well in part because of their attractive bottles and branding, said Zhou Shichen, head of Ruby Red, a wine importer and distributor.
But like any industry in China, selling wine is fiercely competitive.
Foreign wines face a fast-growing field of Chinese wines, which last year accounted for 90 percent of consumption and at the current rate China is on track to soon become one of the ten biggest wine producers, according to Vinexpo's study.
Despite their inferior quality, Chinese wines dominate the market because producers have access to long-established distribution networks.
Foreign companies must pay high promotion costs to get their bottles on shelves, a Chinese wine industry insider said, speaking on condition of anonymity.
And a 14 per cent import duty means that foreign wines are much more expensive than the domestic product.
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