November 3, 2005

China winemakers get better with age

By Emma Graham-Harrison,

MANAS, China (Reuters) - A slice of onion or lemon, some
ice-cubes or a mixer of lemonade are some of the tricks Chinese

wine drinkers use to help a glass of red slip down.

The traditionally spirit- and beer-drinking nation only
began turning grapes into alcohol on a large scale in the last
few decades and is still getting used to drinking the results.

But as the industry matures, and the thirst of China's
newly affluent middle classes for wine grows, ambitious Chinese

vineyards are trying to educate their countrymen's palates

as to win their cash.

Among the contenders to banish the garnishes that make
sommeliers' hair stand on end is Suntime Winery in remote
western Xinjiang province. It used 2 billion yuan of investment
to import European technology and employs a French winemaker.

"China is a new country to wine-making, particularly out
west. Quality is a problem because the industry is young and
the vines are young, but there is some good wine," said Suntime

deputy manager Robert Wu as he leaned over to smell the
Cabernet Sauvignon fermenting in an oak barrel.

Currently massive established firms that invest heavily in
publicity, or even promotions including free lemonade, dominate

the Chinese market. Though unknown abroad, brands like
Great Wall, Dynasty and Changyu are household names in China.

Many domestically made bottles, protected from foreign
competition by sky-high import taxes, can be tart and
unbalanced enough to make lemonade a welcome sweetener.

But Suntime is convinced that with vineyards on a similar
latitude to Bordeaux, top equipment and drinkers' growing
sophistication, it can turn a profit by focusing on quality.

The number of bottles downed is expected to rise by around
a third this year, Wu says, helped by luxury associations and a

relatively healthy image.


The big names' market grip means that around three-quarters

of Suntime's output sells under their labels at present,
but its wines are winning recognition in elite circles.

They scooped prizes in recent Brazilian and Chinese
competitions and have received the ultimate government

China's nine top officials -- members of the politburo
standing committee -- were quaffing one of its top wines, which

retails for 500 yuan a bottle, between batches of political
infighting at their latest meeting, says director Su Bin.

But as quality improves, even the top Chinese winemakers
look largely for domestic sales, because despite cheap land and

labor they are far more expensive than foreign competitors.

Bottom-end bottles sell for around 20 yuan, and while
import taxes mean few foreign wines retail for less than 50-60
yuan in China, cheap Spanish wine can sell abroad for the
equivalent of 10 to 15 yuan a bottle, distributors say.

This is likely because many investors see wine-making
simply as a booming market rather than an art, and after
shelling out for top-of-the-range imported equipment -- a
feature of most serious Chinese vineyards -- they want their
money back fast.

"It is difficult to understand even working inside the
industry, but I think the explanation must be that people want
to realize a profit very quickly. It could be cheaper," says
Suntime winemaker Fred Nauleau, who has worked in France's
Loire Valley.


In just one of Suntime's four vineyard centers, 88 vast
stainless steel fermenters fill an industrial hangar.

There are some imported oak caskets for the finer wines,
but these are dwarfed by the hi-tech equipment.

And that is one of the main problems of Chinese wine, says
Stefan Fleischer, managing director of importer Palette Wines.

"They have big, efficient wine factories but little
personality," says the German, who grew up in a vineyard.

"Their biggest problem is vineyard management, they often
buy grapes from farmers who lease their land, so there is
little control of growing and pruning techniques," he adds.

Suntime say their grapes are mostly bought from farmers who

lease their land, but a full-time manager supervises them.

Climate conditions are ideal in Xinjiang, with dry air and
hot summers limiting mildew, grape rot and other diseases.

But they face other, novel challenges. They have to bury
vines to keep them alive through the bitter winters, and this
year production was cut by thieving rivals.

"We have competition from other wineries who stole our
grapes," said Wu, with the shrug of a man who knows his wines
are helping wean a generation of drinkers off lemonade mixers.

"We are suing them, but they have already used the grapes."