The global downturn hit Doug Hill’s family-run Napa Valley winery hard. But the third-generation California farmer’s hopes for recovery are strong — fueled by heady growth in China.
It’s a long way from his sun-dappled vineyards north of San Francisco to pollution-shrouded Beijing and Shanghai, but that’s where his Hill Family Estate bottles have been heading since last year.
“We’re cautiously optimistic about it,” said Hill, who visited China last September and was struck first by the smog — “My first impression was, where’s the sky?” — but then by the phenomenal signs of growth and wealth.
“There’s an upwardly mobile class of people we believe could afford to drink our wines. It wouldn’t take a very large percent of the 1.3 billion to 1.6 billion people there to create a good market,” he added.
China was the fifth largest export destination for US wine last year, raking in some US$62 million — a fraction compared for example to the US$400 million worth of French Bordeaux sold annually to the Asian giant.
But that US export figure was nearly 30 percent up on 2010, and that trend is expected to continue, according to the Wine Institute, which advocates on behalf of over 1,000 wineries in the western US state.
China was granted Permanent Normal Trade Relations with the US a decade ago, and “the wine was just a trickle back then,” said Wine Institute communications manager Gladys Horiuchi.
“Now it’s the fifth largest market and ... obviously, it will continue to grow just because of the huge potential there, the growing middle class,” she added.
That potential was highlighted last year when retired National Basketball Association (NBA) star Yao Ming launched his own Napa Valley winery, Yao Family Wines.
ASLEEP AT THE WHEEL
The company named after Shanghai-born Yao, who at 2.28m was the tallest player in the NBA, launched its inaugural Yao Ming 2009 Napa Valley Cabernet Sauvignon in mainland China, before selling in the US this year.
While there is clearly a Californian wine push into China, some say Napa Valley will never rival the French or even Australian success in the Chinese market, unless its winemakers get serious about marketing.
“The opportunity is tremendous, but Napa Valley is not working seriously enough to capture consumers in China,” said Mario Sculatti, a wine consultant and trader based in Saint Helena, in the heart of the Napa Valley.
He added: “The Bordelais and the Burgundians and basically all the regions in France, especially Bordeaux, are pouring government dollars into marketing wines in Asia.
“Napa Valley is asleep at the wheel. Countries like Australia and France are dominating the trade over there.”
Back in the vineyards, Doug Hill — whose son Ryan is taking on the fourth generation of Hill Family Estate business -- recounted how he first stumbled on the idea that China might help them recover from the 2008 financial crash.
“It was challenging to sell wine, especially during the initial stages of the recession. Mostly restaurants were having a really challenging time in America,” he said.
“Certain distributors, their market just came to a standstill unless the price points were really low. And that was lower than what was... commercially viable for us in a lot of areas.”
Then last year, Hill heard about a Chinese-born businessman based in Oregon, just up the US West Coast, offering to buy wines from California, Oregon and Washington state, and sell directly in China.