June 18 (Bloomberg) -- At Shi Tang, a private wine club in Shanghai, Jesse Coffino circled the table, splashing crisp Graziano chenin blanc from Mendocino county into glasses of 15 eager members.
All were regular drinkers of French wine but had never heard of Mendocino. Coffino had to unroll a map.
“It’s hard to break pre-conceptions in China about where good wine comes from,” said 29-year-old Coffino, a Mandarin-speaking, San Francisco Bay-Area native, the wine’s importer.
French labels, especially Bordeaux, dominate imports in China, with a 45 percent market share, according to VinExpo figures.
Coffino, studio director for prominent Chinese artist Xu Bing, founded San Francisco-based Pacific Brothers Wine company two years ago with his 32-year-old lawyer brother Eli. They’re among the growing number of American entrepreneurs focused on bringing mid-priced, boutique quality California wine to China’s rapidly changing market.
All see potential in the country’s more than a million millionaires and huge aspirational middle class turning on to wine.
California’s Wine Institute international marketing director Linsey Gallagher said in a phone interview that calls from China have convinced her that “California wine could be China’s shiny new toy.”
Maybe so. By the end of the evening at Shi Tang, Coffino said he had excited converts.
They sipped reds and whites from Calera, Graziano, and Tulocay, the wineries in his portfolio. The favorite was 2007 Monte Volpe Primo Rosso (‘Fox Mountain’ in China), made by Graziano Family of Wines. The fruity Mendocino red blend, neither tannic nor oaky, pairs well with Shanghai’s cuisine.
“We’re going after young middle-class professionals, CEOs and artists,” Coffino explained in New York last month over a glass of spicy Calera Central Coast pinot noir. The China Financial Futures Exchange served the same wine at a recent lunch.
These family-owned wineries have history, which is crucial there, he added, so someone can impress his boss at dinner by recounting the wine’s story.
Interest in mid-range California wine is new in China. Though pioneer importer ASC Fine Wines Holdings lists some well-known brands in its extensive portfolio and Chinese collectors buy pricey auction-grade reds such as Harlan Estate and Opus One, most drinkers are just discovering California makes wine.
Considering that President Richard Nixon served Napa Valley’s Schramsberg Blanc de Blancs 40 years ago at the 1972 ‘Toast to Peace’ in Beijing, why has it taken so long for California wines to catch on?
Napa Valley Vintners communications director Terry Hall explained that only a few wineries exported anywhere before the 1990s. The NVV ramped up efforts in China after the Beijing 2008 Olympics and the economic downturn, sponsoring eight vintner trips to Shanghai and Beijing. That surely helped the state’s exports to China jump 42 percent last year.
Still, small producers remain wary of venturing into the country on their own. Obtaining necessary licenses took Coffino a year. Entry barriers include counterfeiting, customs issues, problems getting paid, and most of all, finding a reliable importer.
According to China Customs’ estimates cited in a recent Rabobank China wine market report, 3,863 companies say they import wine. “Companies that import electrical wire suddenly think they can sell wine, too,” Hall said.
That’s why Paul Leary, president of Napa Valley’s Blackbird Vineyards, a producer of excellent cabernet and merlot, signed on with San Francisco wine export and marketing firm Thirvin International.
“Working with a U.S.-based company that takes care of everything adds a level of comfort,” he said.
Brad Tompkins, a former high-tech executive who set up Thirvin in 2010, said he found going into China harder than expected.
“So much California junk with labels like ‘Lucky Red Dragon’ have been dumped into China, they think all California wines are cheap,” he complained when I met him in Hong Kong last fall.
He’s more sanguine since signing a distribution deal in March with Dxcel International Trading Company, which also handles Jim Beam and American craft beers.
Another player, Nevada-based California Grapes International, opens its first retail shop and tasting bar next month in Beijing’s Sanlitun SOHO district, featuring 100 California labels.
One intriguing model for introducing California reds and whites to the Chinese is California Vintage Wine Bar. It opened the first of a planned chain in Hong Kong’s trendy Soho district in 2011. It peddles wines from its 22 partner wineries alongside California fare like heavenly garlic fries and Laura Chenel’s Chevre from Sonoma.
Chief branding officer Susan Darwin said the top selling wines aren’t the expected fruity reds. Light, crisp, and aromatic whites, roses, and sparkling wines head the list. The mid-20s to 40 late-night crowd goes for bottlings with wild labels. Another Hong Kong branch opens in August and a first outlet in China’s Guangdong province is next.
Back to Jesse Coffino, who’s leaving for Shanghai next month. Personal relationships are all important in selling wine in China, he said. This trip, he’s meeting with property developers adding retail wine shops to give their developments more cachet.
“You get to know them and maybe you sell something the fifth time,” said Coffino. “In China you have to put in face time.”
(Elin McCoy writes on wine and spirits for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own.)
Muse highlights include Warwick Thompson on London stage and Jorg von Uthmann on Paris arts.
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