New Chinese Luxury: Pairing Wine With Duck, Not Sprite

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An employee of Pernod Ricard China attends a wine tasting session at a Jacob's Creek Winery in Barossa Valley, Australia. Close

An employee of Pernod Ricard China attends a wine tasting session at a Jacob's Creek... Read More

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Photographer: Greg Wood/AFP via Getty Images

An employee of Pernod Ricard China attends a wine tasting session at a Jacob's Creek Winery in Barossa Valley, Australia.

Can’t tell a Monet from a Van Gogh? Christie’s International’s China staff can help. Mixing a pricey Chateau Petrus or Chardonnay with Sprite? Sommeliers at Shanghai wine retailer Sarment will explain why not.

As growth in China’s luxury industry slows and consumers turn more selective, high-end brands are boosting efforts to educate consumers on the finer points of haute couture and vintage wines to persuade them to pay up.

Growth in China has decelerated for two straight quarters, a government anti-corruption drive is discouraging expensive gifts, and consumers are shifting to more-understated luxury. To shore up sales and convince Chinese that their products are worth the hefty price tag, luxury companies are offering in-depth lessons in appreciating art, wine, designer clothes, whiskey, and more.

The anti-graft push has “accelerated the change from extravagance to more discerning enjoyment,” said Horace Ngai, China managing director at Paris-based distiller Pernod Ricard SA. (RI)

Pernod Ricard’s teams have organized trips to vineyards and whiskey regions in France and Scotland and tasting sessions in China. Sales of its liquors priced over 1,500 yuan ($245) in China rose more than five times in the last three years.

Subdued Luxury

China’s big spenders are usually self-made entrepreneurs who have spent years “on their business with less time to be immersed in luxury culture and education,” Ngai said. “They now need others to take them on the journey.”

Pernod is battling slower growth in emerging markets as these economies slow.

Chinese consumers were the world’s biggest buyers of luxury goods in 2012, accounting for 27 percent of industry sales, according to consultant McKinsey & Co. Until recently, the wealthiest buyers gravitated to logos and bling. That’s changing as growing numbers travel overseas and get familiar with the more subdued luxury goods popular in Europe.

President Xi Jinping has since last year limited official spending on high-end banquets and discouraged gifts of pricey watches and alcohol that are common in business dealings. Xi warned in November that resentment at graft and the enrichment of cadres and their families threatened the Communist Party’s grip on power.

Mainland luxury industry sales growth is expected to slow to as little as 12 percent annually in the three years to 2015 from an average 27 percent between 2008 and 2012, McKinsey forecasts.

Last year “was the tipping point,” said Ken Grant, director of luxury consultancy FDKG Insight in Shanghai. “People are being selective on how they spend their money.”

Art Tour

Christie’s International has seen a spike in Chinese buying art for pleasure or investment and seeking more information on the subject. The number of clients from mainland China bidding at its international auctions has doubled since 2008.

The auction house this year started offering a Mandarin-language art tour, a 14-day, 198,000 yuan ($32,350) course that moves from Beijing to Taipei to Hong Kong to London examining topics from antique Chinese ceramics to impressionists such as Claude Monet.

Many Chinese luxury shoppers are “in stages of discovery,” said Yuval Atsmon, a McKinsey partner in London.

While luxury brands invest in educating shoppers globally, they go a step further in China. As the country’s middle class expands, some are making their first purchases from Gucci or LVMH Moet Hennessy Louis Vuitton SA. (MC) High-end department store Lane Crawford runs personal styling and concierge teams, where customers can make appointments to pick an outfit for a special occasion or even for an image makeover.

Socialist Uniforms

Many European consumers grew up with an affinity for brands their parents and grandparents trusted, while Chinese shoppers have no such tradition to rely on, said Angelica Cheung, editor-in-chief of Vogue China.

“Grandmothers and mothers grew up wearing socialist uniforms,” she said. “People cannot tell the difference in quality, and the level of sophistication.”

As wine shops mushroom across Shanghai, Sarment Wine is differentiating itself with classes that teach potential shoppers how to pair wines with foods and distinguish among varietals, vintages and regions.

Stephen Su, a 30-year-old project manager at a construction company in Shanghai, noted that China has come a long way since the days when mixing wine with Sprite was popular. On a recent weekday evening he listened attentively as Jean-Marie Pratt, a former head sommelier for chef Gordon Ramsay in London, extolled the pleasures of pairing a New Zealand Pinot Noir with Peking duck.

“You can’t learn much about wine on your own,” said Su, surrounded by other professionals reading booklets on wine. “You need to discuss it in a group setting. It not only helps your knowledge, it enhances the experience.”

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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