Friday, October 19, 2012

I can see right through you...

"It's hard to make money out of selling top Bordeaux to our Chinese customers; they know too much about what other people are asking for it". The comment from my friends in Hong Kong echoes those of a growing number of other merchants I've spoken to recently. Anyone who wants can check prices on and decide where to spend their money. Chinese buyers simply seem to be cannier about the way the do so.

But it cuts both ways. A buyer for a retail chain also admitted to me that she routinely goes onto winesearcher whenever she's offered a new wine to see who else is selling it and for how much. "A French producer recently proposed a wine with an ex-cellar price of €5.30. I liked the wine, but thought it too expensive. And I was even more certain when I saw that a Danish store was retailing it for €4.99. When I pointed this out to the producer, he slashed his price!"

Supermarket chains - especially in the UK - have their own kinds of x-ray specs. With the help of the winemakers they employ on their buying teams, they know, to the nearest 10c the real cost of a winemaker's grapes, his bottle, cork and capsule, not to mention the running costs of his winery. As an Australian joked to me, "they even know how much I pay for the coffee we drink in the office!"

Whether any of this is really healthy is another question. Do the same factors really apply to spirits, to clothes or restaurant meals? In all those cases, we are expected to spend our money irrationally: we pay what it takes to get something we want.

Thursday, October 18, 2012

A fact-finding trip to Hong Kong & China. Part One

Along with Anthony Rose of Decanter Magazine and the Independent, I am helping to lead a group of members of the International Wine Clubs Association on a fact finding trip to Hong Kong and China, set up by Sophie Jump, the association’s dynamic head. The visitors include the heads of top global companies such as Laithwaites/Direct Wines and Hawesko and bosses of wine producers such as CUNE. Some already do business in the region; others are exploring it for the first time.

My own experience of China led me to warn the group that much of the information we heard would be contradictory and that was certainly the case on the first day. Over the course of 10 days, however, thanks to the calibre of the people we are meeting, some clarity will hopefully emerge. 
Yquem galore in a Watsons shop in Hong Kong

I am attempting to record our findings as we go along, without generally attributing of them to the people who may have provided the information. Contradictory information will appear as we encounter it.

Cover of a recent Sotheby's wine sale

The first days included meetings with Andrew Davis of Invest HK, Keith Cheng of the Hong Kong Trade Council; Debra Meiburg MW, the leading authority on Hong Kong and author of an invaluable guide to the Hong Kong wine trade; Greg de ‘Eb of Crown Cellars, creator of the former colony’s – and he would claim the world’s – best storage facility; James Hepple, head of retail at specialist retail chain Watsons wine: wine merchant and restaurateur Paolo Pong of Altaya and new retail chains Bordeaux etc and Champagne Etc; Richard Sutton of Armit, Doug Rumsam of Bordeaux Index, Robert Sleigh of Sotheby's; Lilian Haynes of Northeast wines; Patricio de la Fuente Saez of Links Concept; Laura Budlong of Force 8;  Luke Cianfarini of Corney & Barrow,  and David Wainright of Zachys Asia.

Debra Meiburg's bok: essential reading

 So what did we learn?
Some key points:

  • Of the 7m people in Hong Kong, half a million could be described as ex-pats (including non wine-consuming Muslims). Nationalities such as France (the largest group) and the UK represent would each amount to fewer than 30,000 people. Official consumption figures are 5 litres per person (compared to an impressive 1.3 for the mainland). This figure, however, includes much or all of the wine that is re-exported officially or unofficially.
  • Most fine wine in Hong Kong is consumed by 20,000 people but 2m qualify as wine drinkers.
  • The removal of all duty in 2008 has led to an explosion in the wine market (with growth of 240%) and of wine buying in Hong Kong by mainland Chinese who smuggle bottles back home and visitors from other parts of the region.
  • Huge amounts of wine are re-exported in this way. No-one knows how much wine is involved but it is almost certainly much higher than the 20% quoted officially. Significant amounts are smuggled by people crossing the border.
  • Wine is also smuggled by professionals (for HK$200 per bottle).
  • Readiness to accept bribes by officials also means that larger quantities are trucked across the border and shipped into China's many ports.
  • The Hong Kong and Chinese mainland buyers have – at least for the moment – fallen out of love with Bordeaux en primeur. Unless a very convincing case is made for it as an investment, it is unlikely that we will ever see them buying on the scale they did in 2009. It would be wrong to underestimate the anger they feel at being taken for fools by the pricing in 2010 and 2011. See my previous post about this.
  • The oft-quoted problem of Chinese buyers not liking the fact that they can’t touch and hold their en primeur purchase may be overstated. If an investment or gamble is attractive enough, they will buy at a distance.
  • The most serious Chinese fine wine buyers, with whom the Hong Kong-based people we spoke to deal, like the flavour of old wine and dislike tannin. (Unlike many of their counterparts in the US, for example). Anyone hosting a tasting or tutored wine dinner (of which there are huge numbers in Hong Kong) focused on young and current vintages risks low attendance and high disappointment. (Guests at a Barolo event were apparently unhappy not to taste anything earlier than 2000).
  • Younger, less experienced drinkers in mainland China are happier with younger wine
  • There is no question that high end buyers are switching from Bordeaux to Italy, the Rhone and particularly Burgundy, though there is also a market for top wines from Australia and California (despite what some find to be too alcoholic styles). One anecdote concerned a 28 year old Hong Kong trader who had drunk all the first growths back to the 40s and is now looking for something different.
  • Auction buyers generally only want the "right" wines and the "right" vintages (based on reputation and Parker/Spectator ratings). So, in sales of Gaja wines or Burgundies, disproportionate interest is given to the top wines.
  • Any talk of matching wine to “Chinese” food, is questionable, given the wide range of styles of cuisine (Hong Kong Chinese often find Szechuan food far too spicy for example) and the number of different dishes that make up the kind of banquet at which wine is likely to be served.
  • Wine now features at all big banquets such as weddings where it might not have been included in the past. It is however treated as an option rather than a staple, and beer and soft drinks will also be available.
  • Counterfeiting is a big problem – on the mainland, but so is handling (where 7 in 10 Lafites are said to be fake) and storage. Chinese buyers are now becoming obsessive about provenance.
  • Red is still THE colour. Despite a growing appreciation of good, off-dry Riesling by those moving into wine, white wine is handicapped in ways westerners may not expect. Its name, in Chinese, is easily confused with the strong Baiju spirit; Chinese medicine teaches that it is unhealthy to drink cold liquids with hot food; many Chinese (though far from all) cannot physically drink large quantities of wine and it is seen as easier to linger over a glass of red than a glass of white.
  • Champagne sales are growing, but sweet wine is still slow to take off, possibly because of its role at the end of a meal (when many Chinese drinkers will feel they have already had enough)
  • Buyers are very disloyal in their purchasing habits, shopping around between merchants and comparing prices on Wine Searcher. It is hard to get buyers here to sign up to a Wine Club programme that delivers a case every month, as in Europe and the US. 
  • Online use is growing rapidly, but more as an information resource than for purchasing. This is particularly true of Hong Kong, given its limited size.
  • Wine education is booming, especially among women, but unlike Japan, there are few female sommeliers.
  • The restaurant scene is also booming, but wine sales are suffering from an increased readiness to allow customers to bring their own wine and to pay corkage (BYO). This is now customary even in some of Hong Kong’s top restaurants, though high corkage prices are a deterrent for anyone not wanting to drink a very special bottle. Penetration of wine (imported or Chinese) is still weak in Chinese restaurants frequented by Hong Kong Chinese.
  • Despite the problems of selling white wine already described, it may benefit from the BYO trend and customers buy a bottle as part of a negociation to reduce corkage costs.
  • Hong Kong wine drinkers follow Parker, Wine Spectator and Decanter points. Despite the respect given to local experts like Debra Meiberg MW, Simon Tam of Christies and Jeanie Cho Lee MW, no local expert has the impact of these three publications. Medals from competitions have little impact.
  • This is a market where private labels have yet to take off. Established names plus high scores are definitely preferred.
  • Gifting is hugely important. Many great bottles pass through numerous hands without ever being drunk.
  • There is high understanding and appreciation of regionality in food (better crabs from one place rather than another), but few wine regions are known about. So it is hard to sell wine from regions such as Languedoc, or many DOs in Spain.
Watch this space - or subscribe - for the next part of this report: on mainland China.

Sunday, October 14, 2012

Screen warnings

Two weird news stories in the same week. First, there was the tale from Pessac, near Bordeaux, where a woman called Solenne San Jose tried to cancel her mobile phone contract with Bouygues Telecom. There would, she was told, be a termination fee which, as she discovered when opening the bill, amounted to a mere €11,721,000,000,000,000. To put this in context, Bouyges Telecom wanted her to cough up  €11,721,760,000,000,000  more than the recent EU bailout for Greece.

Solenne San Jose, with her bill

Obviously there had been a computer glitch but, and this is where the story gets interesting, when Ms San Jose called Bouygues to point this out, they apparently refused to acknowledge the error and even went as far as to suggest that she consider paying off the debt by instalments. Presumably at a rate of €11m per month for 333,333,000 years,

Then there was the story In the Coventry Telegraph about a Jet petrol station selling ludicrously discounted fuel. Apparently for four hours, one of the pumps was selling petrol at £0.13.9p instead of £1.39. Long queues of drivers waited to save 90% on filling up their tanks.

In both cases, otherwise intelligent employees seem to have abandoned common sense and trusted the numbers on the screen, however ludicrous they might have seemed

Lastly, and much more seriously, on BBC radio, I heard a British solder talking about why he was opposed to drones Apparently, as a drone controller thousands of kilometres from Afghanistan, he saw what seemed to be a terrorist planting a bomb at the side of a road. He was about to send in a drone to kill the man when another much taller figure walked into the shot. The Brit instantly realised that what he'd thought to be an adult terrorist was in fact a child playing with a toy.

Fortunately, that controller placed less trust in the data on his screen than the employees at Bouyges and Jet, but he admitted that his decision not to kill the child was more a matter of luck than judgement.
Something to remember as we go through our computer-driven lives... When something on the screen looks wrong,. it probably IS wrong.

Thursday, October 11, 2012

Why is Nyetimber's decision so unusual?

The decision by Nyetimber, one of England's top wine producers, not to release a 2012 vintage because of the poor weather this year does the winery great credit.

As the winemaker Cherie Spriggs explained,  "My first obligation... is to ensure the quality of Nyetimber's wines, and we have collectively come to the decision that the grapes from 2012 cannot deliver the standards we have achieved in the past and will again in the future." (my italics)

 The UK's rainy summer
Photo: Heathcliff O'Malley (The Telegraph)

I really love that comment. It's the kind of thing I'd expect a chef to say when explaining why he's decided not to offer a particular kind of fish or vegetable, for example, after judging the quality on offer at the market.

But how often do we encounter it in the wine world? No, what we customarily get is the opportunity to experience the impact of a cold and rainy vintage on a region like Bordeaux or Burgundy, usually for a price that's only a little lower than that asked for the fruit of perfectly ripe grapes. Releasing wines that don't deliver the standards [producers] have achieved in the past and will again in the future is what the wine industry regularly does, on the dubious basis that a) "it's the best we could do", and b) it helps to put the good vintages into some kind of context.

There are occasional exceptions to this rule. I recall Le Pin deciding not to release a 2003 and Brian Croser selling off a complete vintage of his eponymous sparkling wine (only to see it win prizes under the label of the competitor who bought it. Occasionally, in tricky vintages, Burgundy domaines combine wines from several vineyards to sell a single "Premier Cru". 

"But we have to release wine every year", comes the retort, "otherwise we'd go bust". But there is no god who has decreed that wineries actually have to release a vintage every year. When the weather has been inclement, one could blend that year's wine with earlier (and possibly subsequent) vintages and offer an attractive non-vintage. 

One wine producer manages
to sell a non-vintage red wine

It's a simple expedient that has been successfully exploited by Champagne and port producers, but for classic regions like Bordeaux and Burgundy (where vintage conditions can be very variable), it's virtually unthinkable. But who would honestly claim that the 2011 reds from many humble Bordeaux estates would not have tasted a lot better if they had been blended with some 2010 and 2009? How many people have really enjoyed 2002 wines from many of those same chateaux - when they were first released, or since?

Burgundy used to produce non-vintage wines - labeled as I recall as VSR - but they no longer exist and, apart from a few supermarket basic own-label efforts, non-vintage Bordeaux is an oxymoron. I know, because a few years ago, I tried to launch a commercially appealing affordable Bordeaux by blending wines from different vintages and different parts of the region such as Lussac St Emilion and the Medoc. The wine tasted fine, but the gatekeepers decreed that there was no market for it. 

Other braver retailers have thought differently. Laithwaites, the UK on-line firm offers an award-winning non-vintage Rioja, and an even more enterprising and more premium white.

Laithwaites has the advantage of effectively hand-selling its non vintage wine - through its website. Just putting them on a shelf is more challenging. But, in terms of giving the consumer a decent - and a consistent - glass of humble Bordeaux (we're not talking Grand Cru here), Non Vintage makes sense.

Proof that blending does make sense has always been found behind the scenes in France's and other country's major regions where illegal blending has been commonplace. (Even beyond the 15% allowed by many countries' legislation).

Stated bluntly, producing wines like most basic 2011 red Bordeaux, which retails at an average of €3 in France is not sustainable. And, we may see more years like thanks to  climate-change-induced tricky weatherWe still have time to introduce the developing wine markets to the notion of Non Vintage wines, but it will soon be too late. In other words, we are deliberately forcing new Chinese consumers to wines which fall woefully short of standards we have achieved in the past and will again in the future. 


I've also just been told about "Little James" from Ch St Cosme (above). I quote the producer: 
“At Saint Cosme, Little James is the wine of freedom. Our Solera is getting more and more complexity year after year. When we add the current vintage, the solera gains a new element without changing the style… This wine recalls the ancient times when the wine merchants would make wines having only one target: the pleasure. Blending several vintages is considered being a great quality tradition in Champagne. I think it works exactly the same for a great Grenache. The 2011 bottling will be composed with 50% of 2010 along with 50% from all the vintages back to 1999.”

Wednesday, October 10, 2012

What do natural-wine fans eat?

To be perfectly honest, I find the subject of natural wine really quite tedious, but I'm on a panel about it at the EWBC Conference in Turkey next month, so am having to give it some thoughts. Here's one of them...

 Is smoking salmon aceptable to natural wine fans?
And what about that lemon?

"most wines sold in the United States contain "color enhancers," preservatives, chemical stabilizers, Mega Purple™, "oak essence," sugar, acid and the like."

This direct quote from the Natural Wine Co website is wonderfully revealing of the tone that is being taken by at least some members of the natural wine community.

Let's try a similar concept 

"most women in the United States like to read books containing bondage, cookery tips, slushy romance, women detectives, female business icons, reality TV stars and the like"

If you think both quotes are acceptable, I recommend that you stop reading now and find something else to do.

What I love about this kind of thinking is its all-embracing quality, the casual use of the word "most", followed by the lumping together of a set of disparate words. Do "most wines" sold in the US really contain "Mega Purple"? (I'd presume that its use in Chardonnay is pretty limited". And is "oak essence" use really that widespread? (I find it hard to detect in most Pinot Grigio). 

If "preservatives" includes SO2, then this at least has the smack of truth. And is at least some use of sulphor dioxide that might give a wine stability and the potential to survive for a decade or so in the cellar, really that bad an idea?

Sugar - for which one might read rectified must, which is actually concentrated grape juice - must be a bad additive. As must acid (especially the tartaric acid that is naturally to be found in wine). The very idea of adding stuff like this to make wine taste better is totally unacceptable. Isn't it? 

So here are a few simple questions for the wine naturalistas. 

  • Do you add salt and/or pepper to your meat?
  • Do you sprinkle lemon juice (and possibly a little pepper) on your fish?
  • Do you add sugar to your rhubarb, gooseberries, crab apples?
  • Do you eat olives directly from  the tree?
If so, why?


And, a late addition from Michel Smith, "Do you smoke?"
(possibly more likely to get an affirmative in some parts of Europe).