To further our outlook on Chinese and Indian wines, friend of 2point6billion.com, Hugo Restall - editor of FEER - shares a piece he wrote on one of China’s best vineyards…

Jaunt Through Asia: A Model Shanxi Vineyard 6 October 2006 (c) 2006 Dow Jones & Company, Inc.

Liang Baiji scuttles down a long row of barrels to extract another sample of Cabernet Sauvignon for his visitor. The juice came from the same plot, but is aging in a Hungarian rather than a French oak barrel, the winemaker explains. “Which do you like better?” Later he draws samples from two tanks of Chardonnay and ponders how to blend them.

By lunch time it’s becoming difficult to keep it all straight, even after spitting out most of the wine. A chemist by training, Mr. Liang is clearly passionate about his adopted profession. As is everyone else at Grace Vineyard, perhaps because they are all new to the wine business, and because they are attempting something unique.

For we are in Shanxi province, a place that is synonymous in most people’s minds with coal mines, heavy industry and pollution. The bulk of China’s wine comes from coastal Shandong province, where, conventional wisdom has it, the soil and climate are best suited for viniculture. And bulk is the right word, because the Great Wall and Dynasty brand wines that originate there are famously undrinkable. So what hope does Grace have of producing a world-class vintage?

Judy Leissner, the CEO of Grace and daughter of its founder and chairman, C.K. Chan, admits to some trepidation at first. In the boardroom of the family company in Hong Kong’s North Point, she describes how they spent two years looking for the right place. “The scary thing is that everyone is in Shandong. . . . Even today, I meet winery owners who tell me, ‘You made a big mistake.’”

But the gamble seems to be paying off. Grace planted in 1997 and had its first harvest in 2001. And already, it is the only Chinese wine on the menu at several top hotels and restaurants in the region, including Jean Georges Shanghai, chef Jean George Vongerichten’s showcase on the Bund.

The 2002 reserves are shockingly delicious for such a young winery, especially the Merlot and Cabernet Franc. The Cabernet Sauvignon is solid but less interesting, and Pinot Noir didn’t turn out well at all. Shiraz and several other varietals are going in, and a reserve Chardonnay is planned for this year. The winery also produces a small amount of Riesling and Chenin Blanc.

The potential for improvement is definitely there. The style started out resolutely Old World and is continuing in that direction, even though the new chief winemaker is an Australian, Ken Murchison. He visits Shanxi four times a year, spending more than three months there around harvest time. Grace is still experimenting to get the right varieties and techniques to suit the terroir, but Mr. Liang and his team are gradually taking on more and more responsibility.

Creating a great winery from scratch is always an uphill struggle, but never more so than in China. Start with the fact that Chinese don’t really like to drink the stuff. Many view alcohol as one of the unpleasant chores associated with work, since the object of banquets is to get drunk in order to build rapport with partners. And anyway, Western wine is a sour brew that takes a lot of getting used to.

Ms. Leissner describes how they tried to educate the farmers by having them taste the wine made from a plot of land tended properly, and then the wine from a plot where the farmer failed to follow the proper procedures. The farmers’ first reaction was amazement that anyone would want to drink either of them, and they actually preferred the inferior wine because it had a weaker flavor.

Nevertheless, forging the way in Shanxi has its advantages. The climate is dry, and there are no other vineyards around, meaning there is less of a problem with diseases. The pollution here is actually not so noticeable, as the Taigu Plateau 40 kilometers south of the capital Taiyuan is primarily agricultural, growing apples and dates. It’s also better to be far away from the big wineries in Shandong that have tarnished the image of Chinese wine — there are fewer bad ideas to overcome among the farmers and staff.

That’s important because Grace is definitely not a big commercial operation — capacity is four million bottles, but current production is about half a million. Ms. Leissner and her father are dreamers, trying to create a truly great wine, and profit is of little concern. Although she says the winery is already making a bit of money, they went into the enterprise prepared to take losses for 25 years: “That’s something that, when you tell people, it sounds ridiculous. But our vision is not producing wine. Our vision is producing the best wine.”

Other family investments in China, which range from water treatment to real estate, focus on returns. Grace is a legacy. Ms. Leissner compares it to the beautiful merchants’ mansions that are now a tourist attraction in Shanxi. “Even if you are super rich today, if you don’t leave anything that is valuable to others, nobody will remember you.”

That motivation for founding a vineyard might be common, even a bit clichéd now in the West. But in China, most businesspeople are still in the phase of looking for quick returns, what Ms. Leissner calls a “gambler mentality.” Building for the long term and cultivating an appreciation for things of beauty is not yet the norm.

However, Grace is definitely appreciated by the local governments in Shanxi. Perhaps even too much. At the winery, a group of township officials stops by, already a little inebriated, and they loudly consume several bottles. A large brass plaque with a hammer and sickle on the outside of the main building proclaims the presence of a Communist Party branch.

In a strange nod to the socialist past, Grace has become a model agricultural enterprise. Thus the government brings in busloads of officials to look and learn, much as they used to make pilgrimages in the communist era to another Shanxi model farm, Dazhai. This time the capitalist roaders are in charge, but it’s still a head-ache managing so many visitors, especially when they start scooping up bag-fulls of the river stones lining the pathways.

The official attention is a burden for a young business that is not really set up to accommodate so many visitors. But the Chans know how to navigate the official bureaucracy, as well as win the trust of the local farmers. In fact, Mr. Chan went to college in Shanxi after spending the Cultural Revolution as a shepherd in Inner Mongolia. Then the family was allowed to emigrate as they were originally Chinese-Indonesian. Once in Hong Kong, they first started out in trading and then began investing in the mainland after the reform era began.

So relations with the locals contracted to sell their grapes to the winery seem to be tolerably smooth, although it is time-consuming and labor-intensive work convincing the farmers to restrict their yields. The Grace viniculture team is out in the plots every day, visiting each one at least twice a week. The 400 farm households are paid a certain minimum price for the grapes plus a variable bonus that depends on a host of factors affect quality — especially whether they follow the experts’ instructions. As a result, the farmers have clearly prospered, with most riding motorcycles rather than the bicycles that are the norm elsewhere.

After harvest, the grapes from each plot are tracked through the fermentation and aging process. That’s how Mr. Liang is able to tell which barrels contain the wine from certain areas. Such extreme attention to detail is allowing an accelerated process of trial and error.

The focus on building a brand in China means that only about 15% of the production is exported. The main base of distribution is in Shanxi itself for the table wines, and Grace is playing a part in the cultivation of a customer base among the new middle class, helping them to appreciate wine rather than just drink it to show off.

The need for education has clearly influenced the decision to set up a second operation, which will be in an area near Xi’an, not far from the site of the terracotta warriors. This time the focus will be on creating a New World style wine, and tourism will play a part, with a small hotel adjoining the winery. That is similar to the approach of the Bodega Langes winery in Hebei province, which runs a wine spa.

China’s tariffs on imported wine are relatively low at 14%, Ms. Leissner says, so competition from abroad is intense. One challenge is training the staff at hotels and restaurants so they feel comfortable recommending a Chinese wine to customers who may assume that an import is necessarily superior.

Local and national pride in a good quality product may be responsible for the winery’s early success. “Chinese don’t want to be known for always making the cheapest stuff,” Ms. Leissner explains. As a new ethos develops emphasizing quality over quantity, Grace is well positioned to emerge as China’s most respected wine brand.

Thanks for this Hugo!

This entry was posted on Tuesday, April 17th, 2007 at 2:24 pm and is filed under Travel, Culture. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.