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Finding New Latitudes In Wine
DERRICK HO
Wine is warming the hearts of many Asians. But how well do you know your wines? Find out what’s fermenting in the wine industry and what’s drawing the Asian crowd.
1 July 2005
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Japan is famous for its food fads. One year, Japanese sales of one wine made by the Calera Winery in California jumped by a staggering 736 per cent. The reason: it was featured in a Japanese comic, Sommelier. Its hero was a crime-busting wine expert, who in one issue decided that Calera's Pinot Noir was the world's best. Better even that its ancient and honoured French rival, Domaine Romanée-Conti. Calera became a cult. Sales soared. Japan was seized by a wine craze in the 1990s. The Japanese delivered wine with their pizzas. Sommelier (wine master) classes were packed. By 1998, the Japanese drank 800 million litres a year. The volume of sales has since declined. But the enthusiasm for wine is spreading across Asia.
Family karaoke joints in Taiwan serve wine. Tai-Tais are mixing it in their facial creams. Some business schools in Singapore have made wine classes compulsory.
New appellations and champagnes are replacing the hot and sharp-tasting cognac and whisky. For business executives and the trendy, wine is the hip new thing. According to Datamonitor, a third of people drinking wine in Asia – including South Korea and Singapore – are aged 25-34.
And Asians seem to be voting with their tongues. While European wine experts pair white wines with Thai and Korean cuisine, Asians prefer smoother reds. A lot of it has to do with perception, notes business-school professor Hellmut Schütte. (He's author of Consumer Behaviour in Asia.) Particularly since red is Asia’s favourite colour.
Reds have greater health benefits. And if people want to be seen drinking wine, red is more visible. Red wines are also more expensive than their white counterparts. They convey prestige, generosity and sophistication.
‘People in Asia are drinking wine, and only red wine, because they feel they now belong to a certain class of people where they are expected to drink wine, whether they like it or not,’ explained the professor.
He points to the people who mix wine with ice cubes and cola to mask the alcohol taste. Despite 3,000 years of history, grape wine is still foreign to many Asians. Ultimately, it is a status symbol. It’s often more about face rather than taste. But as consumers become more sophisticated, they might eventually realize that high prices don't always mean better taste. ‘These people normally evolve to the next group,’ reports Charlene Chong, chief executive of The Grotto, a wine-marketing consultancy. ‘They become more discerning. Initially they say, “I must be seen drinking this wine or giving this sort of gift.” But after a while, you might tend to go “Hey this is a $20 bottle of wine, but it’s a damn good bottle. This bottle of wine on the other hand, costs $500. I’ve tasted it and I know its crap.”’So how can wine consumers become more acquainted with their Lafite Rothschilds and Mouton Rothschilds? Wine enthusiasts point to education. Asian entrepreneurs are already spreading the ‘gospel of wine’. Three years ago, Tan Yean Kai started the Nanyang Technological University’s (NTU) Wine Appreciation Club in Singapore, as an engineering student. The 26-year old turned his passion into a business.
He now runs Phylloxera, a wine appreciation company. Business is booming. Corporate organisations and individuals are booking wine tasting lessons.
‘We started the club because we felt that wine should be enjoyed and appreciated by everyone,’ says the self-professed ‘wine geek’. He feels a lack of self-confidence is preventing Asian consumers from trying merlots and chardonnays. ‘Once you acquire that basic knowledge, it will help you go a very long way.’ The NTU wine appreciation club has since quadrupled its membership. Consequently, Mr Tan is trying to set up an elective module in wine appreciation at the University. And he wants to launch a wine bar in the Students’ Activity Centre.
In Thailand, Khun Calerm Yoovidhya–the man behind the internationally successful drink Red Bull–owns Siam Winery. His Eastern energy drink became hugely popular in the West. So he hopes to help wine–a drink generally associated with the West–establish a standing in the East.
The Siam Winery harvests grape varietals twice a year, from strips of land along the Chao Phraya Delta. Its Monsoon Valley range was developed to ‘complement Thai food’. Siam Winery was profiled on BBC Radio. And its wines earned praise at the 2003 APEC Conference. The winery expects to export 360,000 bottles this year. (The UK is its biggest importer.)
‘Although we are beginning to gain international recognition, many still don’t know much about Thai wine,’ said Kim Wachtveitl, the firm’s Director of Business Development, in an interview with Asia Food Journal.
The winery hopes its education centre will teach locals about wine and attract tourists. They believe the 12 million annual visitors to Thailand can spread the message of Thai wines far and abroad. A winery house, a wine trail and a restaurant are planned. Tax is still the biggest stumbling block. Like India, excise duties are prohibitive and ‘insanely’ high. The Thai government halved its tax rates to 200 per cent. But that is nowhere near the 25 per cent imposed on traditional fruit wine.
TOUGH COMPETITION
The Thais also face tough competition from Australians when import duties are phased out. The Thailand-Australian Free Trade Agreement (TAFTA) was signed last year.
‘How can we compete, if taxation is not changed to grow the local wine industry?’ asks Mr Wachtveitl. ‘Many restaurateurs want to promote our wines. But, the lower priced imported wine holds them back.’
According to Datamonitor, the Thai wine market is set to more than double by 2009–consumer consumption is forecasted to hit 11.7 million litres. Ms Chong says the wine industry is starting to look like the dot.com boom. Luckily, the pace is slower and more cautious. ‘But we still want to check out this wine thing. Then again, it also tells us that there is a lot of potential. Something’s brewing in this part of the world, or fermenting since we are talking about wine,’ she says.
Branding seems to be helping, notes Ms Chong in her Blog titled ‘Rotten Grape Juice’.
New World, And Now New Latitudes?New World Wines come from outside the traditional wine-growing areas of Europe and North Africa, such as South America, South Africa, and Australasia. New World Wines are typically riper, darker in colour, fuller-bodied, smoother, fruitier and more alcoholic than traditional European products. And they've been very succesful, much to the annoyance of Old-World wine makers. But now there are also New Latitude Wines.
This latest term is for wines made from grapes grown in warm Mediterranean-type climates between the 30th and 50th parallels, in both the northern and southern hemispheres.
Thailand pioneered the production of New Latitude Wines, made from grapes grown in the north of the country.
Professor Schütte also agrees. New World Wines producers like Chile, Brazil and Australia have shown to be particularly successful in their branding. Australian brands such as Jacob’s Creek and Penfolds are good examples. Their labels state the grape varietals used, indicate whether or not the wine is vintage, and have easy to pronounce names. They also have the edge in technology. (See ‘Conquering Canning Conventions’ box for more details)‘You have to give consumers guidance and also steady quality; that’s what branding requires,’ Professor Schütte told AFJ.
Consolidation is crucial. If the Asian industry wants to prove that wine is more than a passing fad, it will have to be a combined effort, says Ms Chong. It needs the muscle of little ‘boutiques’. She reports that consumers are not responding to the merging of big brands.
And as the region develops, an association or an independent body will be needed to serve the interests of industry players, and to lobby for fairer conditions.
‘No small importer can do this alone. Even the big boys can’t do it. Marketing and branding can take up a lot of resources. A larger body must step in and help, suggest Ms Chong. ‘And if there is such a concerted group effort, South East Asian and Chinese wines will have a position in the world.’
Smaller players must play their individual parts as well. Ms Chong advises that they focus on channel strategy. Apparently, it’s a crucial step that many local wine importers are missing out on.
‘A lot of people want to do everything. They want to retail. They want to distribute. They want to open a restaurant. They want to do everything. When that happens, there’s a lot of channel conflict.’ Wine entrepreneurs must stay focused by moving into specialized and niche areas. They should identify partners who share a common vision. And that means not competing head-on with the supermarkets, which have the luxury of economies of scale.
‘That’s the way to grow, the way to sustain,’ Ms Chong stresses. ‘And when this industry picks up even more, then it's time to boom. Likewise, Professor Schütte agrees wine is here to stay. But he has one piece of advice for the industry: ‘Just make sure you don't end up in the fashion industry. That’s the great danger. Fashion is something that goes out of fashion.’
Conquering Canning Conventions
You’re probably familiar with coffee or beer in a can, but wine? Doesn’t wine only come in bottles? It did, until GregStokes almost broke one while relaxing in the Jacuzzi. ‘I thought this is really stupid,’ the Australian said, ‘not being able to enjoy wine in the outdoors, and being restricted to a glass.’
That hot summer day started seven years of research and development. He and his business partner Steve Barics developed a technology that puts wine in cans and keeps the taste through a resin-based liner. Now, still and bubbly canned versions of Cabernet Shiraz Merlot and Chardonnay Semillon are on sale under the Barokes brand.
And the patented Aussie technology Vinsafe allows wine to retain its quality and bouquet even at temperatures of 50°C, for up to six weeks.
These claims were put to the test when a vessel carrying the products broke down en route to Japan. The wines were stranded in the scorching hull of the ship for more than a month. After that experience, its creators are confident that ‘Wine in a can’ will withstand the bumpy and hot conditions of weathered inland roads across Asia.
Wineries from Australia, US and Europe have approached Barokes for private labelling and licensing rights. In Asia, two out of the four largest beer manufacturers in Japan have said they're interested. ‘Can manufacturers and sealing companies from Asia are coming to us because they feel there are applications to fruit juice and wine derivatives,’ Mr Stokes added.‘There are sceptics. ‘For years, you build up the image of wine being something sophisticated, explains Professor Hellmut Schütte, a marketing expert and wine fan. 'And now it comes in a can?’
But Barokes stays optimistic. It hopes canned wine will help transform the drink from one that is consumed on special occasions to a product used daily.
There’ll always be a place for bottled wine when you’re sitting in a restaurant,’ Mr Stokes said.
‘What we want is to simply introduce wine to people and give them the ability to enjoy it where they wish to.’
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