Business

China's growing interest in Californian wine

Harvesting grapes in the Napa Valley
Image caption Grapes being harvested in the Napa Valley

As wealth grows in Asia, there's more money for the finer things in life, including wine.

Popping a cork and pouring a glass of something red or white is a status symbol for China's emerging middle class.

As a result, Chinese investment is moving into the US wine industry, and some of America's top winemakers are touting their products in China.

In 2011, winery Sloan Estate, in Rutherford, in California's Napa Valley, was sold for $40m (£25m) to Chinese investors.

Not far away, at Cakebread Cellars, also in Rutherford, they're working 12-hour shifts seven days a week to get the harvest in. Tonnes of grapes are being put through a sorting machine that separates the tiny, black fruit from the stalks.

Bruce Cakebread's father began making wine here on a small scale some 40 years ago. He and his brother now run the business, and they produce hundreds of thousands of bottles a year.

Mr Cakebread has already made several trips to China to promote his company's wines. And although Cakebread Cellars is a family-owned and run operation, he doesn't feel threatened by Chinese money coming in to the area.

Instead, he believes Napa's success lies in its willingness to embrace change, in the same way as nearby Silicon Valley.

Mr Cakebread says: "What makes Napa Valley, and northern California, a different wine growing region to other areas where tradition is very important, is that, here, we're always open to new ideas and saying, 'How can we make it better?'"

Wine cocktails

The market in China is "hot", according to Linda Reiff, president of the Napa Valley Vintners Association - a trade body for the local winemakers. She says her members decided to focus on selling to China during the recession.

Image caption Linda Reiff welcomes the big rise in sales in China

"For Californian wine, China is the fifth-largest export market, which has increased in sales by 20% in one year alone… for our membership, we've gone from only a handful of our members selling wine in China to over 100 now," she says.

Californian wine spans a whole range of tastes and prices, Napa makes up just 4% of the total, but it accounts for 30% of the economic value of the whole US wine industry. It is a high-end, high-price product.

Winemakers in the area are keen to protect their brand. The new Chinese middle class may like to be seen drinking wine, but they aren't always used to the taste. So, if you order a glass of red in China, you may find it's served mixed with sweet fizzy drinks and ice.

Ms Reiff says they've been working to counteract that, spending time and money running educational seminars and tastings.

Trust issue

This year's harvest has benefitted from ideal weather, according to Scott Meadows, of Silenus Vintners. He also insists there can be no compromise on the quality of the wine.

His company has a Chinese owner. He says 80% of the wine Silenus produces is now sold in China. But Mr Meadows says his owner doesn't interfere in the making of the wine, and the employees have the advantage of knowing they have a reliable partner distributing their product in China.

Image caption Napa Valley wines are at the high end of US winemaking

Mr Meadows says: "I don't need to worry about getting paid for my wine… China's an emerging market, so it hasn't had a wine market or distributors over 10-years-old at this point.

"So if you're a traditional winery trying to sell, you don't know if you can trust the organisation to pay you, or to be there long term to sell your brand. So that is an issue for a lot of wineries, we don't face."

Image caption Scott Meadows says job security is key

That question of trust, protecting the brand and ensuring fake wine isn't being sold under a Napa label has been a problem the upmarket winemakers of Napa have had to confront.

But according to Mr Meadows, with their willingness to embrace new ideas and new people, they aren't worried about who owns the industry.

"Frankly, what people are more concerned about in America and in Napa is jobs and job security… you can't make a Napa wine in China or in France, but what we make here, you can sell somewhere else," he says.

"If the ownership is Chinese or Japanese or French, what you're really doing is ensuring American employment."

He's not worried about the idea of this century being the Asian century. "That's perfectly fine with me. We're in a global market place now," he says.

Listen to Ritula Shah's report on the World Tonight programme on BBC Radio 4 at 22:00BST on Tuesday 1 October and then on the BBC iPlayer.

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