Oregon Pinot noir shipment on slow boat to China

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The world’s most populous nation is now offering what is arguably the world’s best Pinot noir – the red wine that has put Oregon viticulture on the map.

A container of Oregon Pinot noir is making its way across the Pacific Ocean to a rapidly developing Chinese market that is just beginning to get a taste for red wine. This first shipment of 1,250 cases will be followed up by monthly shippings alternately to Beijing and Shanghai, where Oregon Pinot will be sold as a high-end, high-quality red wine in upscale hotels and restaurants.

“Annual alcohol sales in China are about 44 billion U.S. dollars with wine representing about 10 billion dollars,” says Brian Liu, international trade manager with the Oregon Department of Agriculture. “If we can share just one-tenth of one percent of that wine total, that’s 10 million dollars for Oregon.”

With the help of ODA and American Pacific Group LLC, an Oregon company that is acting as the distributor of Pinot in China, the state’s wine industry hopes to become well known and in demand while competing with France, Australia, and California in the burgeoning Chinese export market.

“We are the marines hitting the beach,” says Doyle Hinman, China marketing coordinator for the Oregon Wine Board and sales director for Henry Estate, one of three Oregon wineries involved in the inaugural shipment. “I don’t care if it’s China or Mongolia, being the first in a new market is exciting and a great opportunity. This shipment is the culmination of hard work put forth by a lot of people.”

ODA’s Liu has been doing his homework the past couple of years, noting that the traditional rice wine in China is on the decline at a rate of 10 percent each year while red and white wine consumption has grown at a 13 percent clip each year from 1997-2002. Test marketing and wine tastings within the past year confirmed that the time is right for Oregon Pinot to take the plunge in China.

“We can compete successfully with California because we are going after a niche market,” says Liu. “California wines have more of a mass market approach. We are looking at a much more specific kind of customer for our high-quality wines.”

The maiden voyage of 15,000 bottles of Oregon Pinot noir set sail this past weekend out of Oakland, California and will arrive in the coastal port of Tian Jin by the end of the month. Every drop of the wine has already been sold. Without the vision and efforts of Portland-based American Pacific Group LLC, the wine would not have made it to China.

“This is a historic shipment of a very unique product into a very explosive marketplace,” says Terry Protto, one of four partners of American Pacific Group (APG). “One of our principal missions is to grow and improve the Oregon economy by exporting Oregon products. The capability of others to replicate the growing conditions of Oregon and produce Pinot noir is very limited, making it an exclusive niche product in China. Therefore, we are able to charge a premium to compete with the best wines of the world.”

Taking a flip chart, APG began crossing out products from Oregon that could be grown or easily found in China. When they were done with the written exercise, only Pinot noir remained on the list.

APG is able to purchase the Pinot directly from Oregon wineries and ship it to its own duty-free warehouse in Tian Jin. From there, it is shipped to an APG warehouse in Beijing where APG employees will fulfill the already-taken orders of hotels and restaurants in China’s capital city. The initial shipment includes Pinot noir from three Oregon wineries: Amity Vineyards of Yamhill County, King Estate of Lane County, and Henry Estate of Douglas County. In order to fill a container bound for China, APG will need to pool Pinot noir from various wineries. The cooperation is allowing Oregon’s wine industry to penetrate the Chinese market.

One of APG’s principals, Xu Han, is a Chinese national whose knowledge and connections within the Chinese government paved the way for the wine shipment. Still, it took months of paperwork to seal the deal.

Jane L. Tan, APG’s chief financial officer, will manage the wine operations from her Shanghai office.

A major challenge for Oregon’s Pinot noir is in the education of the Chinese consumer. Business travelers and expatriates in China are familiar with red wine. China’s national population is different.

“The common method of drinking alcoholic beverages in China is what they call `ganbei’- what we would refer to as `down the hatch’,” says Protto. “The Chinese will often take very good red wines and mix them with Sprite or Seven-Up, and then ganbei. We need to educate our new customers so they appreciate our wine by sniffing, swirling, tasting, and allowing the wine to breathe.”

ODA, the Oregon Wine Board, and the Northwest Wine Coalition are working together to set up wine tastings and education seminars in China for April, 2005 that will feature Pinot noir and other Oregon varieties.

One factor in Oregon’s favor is a strong message being delivered by the Chinese government on television and other sources of information in which drinking red wine correlates to a healthy heart. Much like the Japanese, the Chinese consumer is becoming very interested in adopting a healthy lifestyle.

Another Oregon wine specialty- Pinot gris- may soon be available in China through APG. Other Oregon food products often coupled with wine are part of the future export plan for China. ODA continues to feature seafood, pears, and cheese from Oregon as a tie-in to the success of wine.

“Oregon is known for grass seed and perhaps nursery products in China, but the Chinese would never think that Oregon would produce such a high quality wine,” says Liu.

Another shipment of Oregon Pinot noir is being arranged for December. In time, Oregon wine may be offered at a high-end retail level. But the first step has been taken. Oregon Pinot can now join French Bordeaux and other prestigious offerings on the wine list of five-star hotels and restaurants in Beijing and Shanghai.