Small Wineries Are Betting on the Asian Giant

Last week, the "Hong Kong International Wine & Spirits Fair" took place. One Argentine wine was selected as the favorite to pair with the typical Chinese dish "Peking duck," and another was the only one to get a gold medal.

The "Hong Kong International Wine & Spirits Fair" took place from November 3rd to 6th. 21 wineries from Argentina took part, and 38 wines were awarded with medals of gold, silver and bronze. The majority of the wineries that participated in this contest were small ones. Many of them still don't export to Hong King; some only do so in small quantities to China or Japan.

During the competition, the Asian judging panel chose one Argentine wine as being the ideal wine to pair with Peking duck, the iconic dish of Chinese gastronomy: Judas Malbec 2006 from Bodega Sottano. Another of the wines given recognition in this contest was Speri Prodigo Reserve Malbec 2007, a wine from a small enterprise by an Italian investor, which was the only wine to get a gold medal.

Judas Malbec 2006 is a 100% Malbec wine from Luján de Cuyo, and it currently has a retail price of [ARS] $270 per bottle. It is a limited edition product with only 8,000 bottles being made per year.

Pablo Sottano, one of the brothers who own the company, explained to Día a Día del Vino that this recognition, undoubtedly, opens a big door as it indicates that this style of wine suits Asian consumers and their foods.

Bodega Sottano doesn't yet export to the Asian market. "Our objective for participating in this contest was to get to know more about Hong Kong and the possibilities that it has for the wines of Argentina. It is a very big and interesting market, and one only has to look for a suitable importer to do a good job. In China as in most countries, there are consumers for every segment of the market. The difficult task is to find them," emphasizes Pablo Sottano.

On to other news, the only wine that received a gold medal was Speri Prodigo Reserve Malbec 2007. This wine has a limited production of 70,000 bottles and received twin honours: best Argentine Malbec and best red wine among those competing in the Hong Kong competition. Wines produced by Alessandro Speri were also entered in last year's Singapore competition, where Prodigo Malbec Clásico 2005 took top honours with the gold medal.

According to Alessandro Speri, owner of the winery, "This market is very promising and attractive for small wineries." Similar to the aforementioned winery, Speri does not yet export to Hong Kong. Nevertheless, he emphasized that "starting with these awards, several doors have opened. It is becoming evident that little by little, Asian consumers' interest in Argentine wine is growing."

One of the wines given recognition with a silver medal was Cristobal Oak Reserve Shiraz 2007 from the winery Don Cristóbal. This wine has a value of [ARS] $90 in the local market and USD $15 in the United States. Its production is limited, and only around 15,000 bottles are made.

Finally, Bodega y Viñedos Lanzarini received three bronze medals with its wines Magneta Malbec, Montecepas Limited Edition, and Montecepas Bonarda Rose. José Luis Lanzarini, one of the owners of the winery, mentioned to Día a Día del Vino that "our company considers the Asian market to be a very interesting market because of its large population of potential consumers with projected growing purchasing power, due to its experimenting with Westernization - hence the challenge of addressing it."

"This is the second time that we participate. In the first mission, we were able to solidify operations in and export to Thailand and Hong Kong, with more than one transaction per client. In this way, it was a complete success. In this second visit, our goal was to reaffirm our relationship with the clients that we already have and make new contacts in countries or zones that are as yet undeveloped," said José Luis Lanzarini.

The businessmen whose wineries received honours commented that their forays into the Asian giant were aided by the Centro Federal de Inversiones (CFI), which provided a helpful primer on this market as a way to get acquainted with it before starting to knock on doors.

Asia in the spotlight

According to data provided by ProMendoza, by 2011 Asia could represent 4.8% of global wine consumption. On this continent, it is expected that two years from now, the consumption of fine wine and sparkling wine will have grown by 79.3% in relation to 2001. In the period 2006-2011 alone, the growth rate of consumption in Asia - according to assessments - will reach 48%, which is 8 times faster than the rest of the world. It is estimated that the consumption of wines in Asia (excluding Japan) will reach a value of USD $17 billion in 2012 and USD $27 billion in 2017.

The exports from Argentina to Hong Kong, considered a separate importer even though it is part of China, grew in volume by 83%. They went from 28,882 cases of 9 liters each to 60,245 such cases being exported this year. Meanwhile in value, the growth rate was 108%. This country [region] bought USD $1.75 million worth of wine from Argentina in 2009.

One of the characteristics of this market is that it has been the only place in China that is free of wine taxation. Last year, all drinks of less than 15% alcohol were exempt from internal taxes. Neither does Hong Kong have a sales tax (the equivalent of IVA). It is a destination where importing, warehousing and distribution of wines have no major complications. However, the wine business owners consulted by Día a Día del Vino mentioned that the downside of this fact is that an avalanche of wines and brands have saturated this market, creating an impediment to brand positioning.

Cristobal Lapania, owner of the winery that bears his name, explained that because of the zero taxation, the market is saturated with brands and is experiencing an overstock of merchandise. To this is added the fact that per capita consumption is under 2 liters and thus product turnover is very slow. "Even so, Hong Kong is a business hub and potential market that is worth getting to know," he pointed out.

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