Can wineries combat 'cheap plunk' in China?

Wine drinking may be a new phenomenon in China, but it doesn't mean the quality stacks up against the rest of the world.

The Asian country, with its relatively new taste for wine, cars and gadgets, has the potential to be a lucrative market for wineries across the globe. California, Chile, and more recently Israel are some of the places that have begun fostering the potential that vineyards have to offer, but against those looking to make a quick buck, dreams of breaking into China may be little more than illusion.

In any market, price competition reigns. This is also true for China, says winemaker Mark Bright, whose Californian wine is taking a battering on reputation due to knock-off and cheap "plunk" wine which is overpriced flooding the market. Against this, Californian wine has little chance against bulk-bought poor quality, which is usually two or three times more expensive than what U.S. consumers pay.

In 2012, China accounted for $74 million of the $1.4 billion market in U.S. wine exports, 90 percent of which came from California. According to the Wine Institute, this is up from just $2.6 million in 2003.

Efforts are being made to fight against "cheap plunk" flooding China's market -- including trips and journalist conferences -- but it is likely to be a slow process. Robert Dahl, chief executive of California Shiners -- a blending and bottling company for wine manufacturers -- said that the situation is so bad, "people just show up with bags of cash and say give me the cheapest wine." But as he mentions, such practices simply "makes us all look bad."

Potentially, some of China's problems may disappear as education and availability train palates to be more discerning and demand higher quality, and wine buyers cater for this demand.

Via: Wall Street Journal

Image credit: Charlie Osborne/SmartPlanet

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