The long French domination of wine sales in Asia may at last be under serious challenge but the magic name of "France" on a label helps keep them in first place as leading exporter of wine to the region."There's also a certain snobbishness," says Hong Kong wine guru Lillian Haynes. "An expensive Bordeaux signifies status."

Wine sales to the region are expected to show steady growth, but Kevin Tong, manager of Hong Kong's Concord Fine Wines, says: "The buying craze of 1996 is over." The hangover of those heady days remains, however, with warehouses in Taiwan, China and Japan holding large amounts of wine. Importers sent much on consignment and have still not been paid. Some stocks are being sold off cheaply in Taiwan to raise money. The condition under which wines have been stored in China makes it likely that bottles will never be sold, at least to anyone who knows about wine.

Market analysts suggest that stable overall growth of 15% to 25% can be expected in most Asian markets over the next three years.

"The wine craze is over and that's good," contends Spain's regional trade commissioner, Tomas Gomez. Now, consumers can pay more attention to buying good wine, he adds.

He says consumers are becoming adventurous, still buying Bordeaux but also experimenting with wines from Spain, Bulgaria, Canada (nostalgic Chinese migrants who have returned home!) and California.France Is Dominant

Two nations dominate the import and export of wines in Asia; of all wine sold in the region, Japan buys about 60% and France sells about half of it. But producing reliable, meaningful statistics is difficult. Many countries track imports by the financial rather than calendar year and some regions have figures skewed because they are transshipment ports (like Hong Kong from where much wine is smuggled into China).

Some trends are obvious, however. The demand for red wines continues, fueled by the French Paradox and, more recently, by growing sophistication among wine drinkers.

In 1996 and 1997, Japanese importers splurged to buy immense quantities of wine. Then came the Asian recession and much was left on their shelves. Sales in following years plummeted. New Zealand sales to Japan, for instance, dropped 65% in volume and 43% by value in 1998. This is a typical pattern for all exporting countries.

Mark Allen, the export director for Asia of Maison Louis Latour of France, admits the New World made inroads into some established sales patterns. Less expensive wines perceived as offering better value for money became popular in Asia, he said.

"But France will be coming back stronger than ever, as it always does," he insists. Allen stresses that having good agents on the ground in Asia is absolutely vital for sales. A good distribution system is essential and having reliable and trustworthy representatives in the marketplace every day is the only way to ensure success, he says.

Demand Will Grow

Lillian Haynes, who made her name pioneering New Zealand, South African and Chilean wines in Hong Kong, says New World wine is picking up market share.

"Consumers are becoming more educated," she says. "They are looking for wines that offer value for money. Demand will continue to grow as the Asian economies stabilize.

Like other knowledgeable market analysts, Haynes says there will always be a market for higher-priced wines, but that growth will be in commercially-priced areas. And tastes are changing; she points to a surge in Pinot noir sales. This is due to consumers knowing more about wines and going for varietals that taste better with Asian dishes.

One of Asia's most respected and experienced wine dealers, David Webster of R[acute{e}]my China, notes wine consumption in China and Southeast Asia has grown considerably in the past 10 years.

He believes there are several trends pushing the market today: women drinking wine; and a universal demand for red, as wine has come to be seen as sophisticated and healthy.

In the 1980s, as much as 65% of sales in Southeast Asia were white wines. Today in Chinese markets, that's switched to an 80% demand for reds. Like other observers, Webster sees the financial crisis that exploded in 1997 making people more aware of value buys. Coupled with extremely aggressive marketing, that has seen Australian sales soar, followed by Chilean and U.S. sales. Meanwhile, French exports have stayed flat.

Many observers are looking to Korea as a major future market. The country is prosperous, but isolated. When the Asian crisis hit, the government in Seoul instructed Koreans to be patriotic and not to spend on foreign goods, to save hard currency. Loyally, Koreans obeyed and wine sales (and all other imports) dropped dramatically. Now that good times are back, Koreans feel confident. A nation of big drinkers, especially among men, they are seen as a very large potential market, and with the eyes of the sporting world focused on them in 2002 when they co-host the soccer world cup (with Japan), many shrewd wine exporters are planning a major marketing and sales drive in the country, linking wine with the glamour sports teams.

Importing Asian Countries:

Singapore: Wine sales were 245,056 cases in 1996, rising to 322,665 in 1997 and to 334,031 in 1998. In 1999, sales rose another 14%.

Taiwan: The large importing firm of Caldbecks estimated that 180,000 cases were still held in bonded warehouses at the end of 1999. Wine consumption last year was about 650,000 cases, but other analysts say Taiwan merchants are still sitting on a wine lake of immense proportions. They don't predict an upsurge of sales this year. In 1999, France sold Taiwan 49.2% of its imported wine. Then came Australia and Italy, both with 23,500 cases. Germany, Spain, Chile and New Zealand followed, making up a total of 14% of the market between them.

Thailand: Wine imports dropped from 377,311 cases in 1998 to 349,485 cases last year. (This is not astonishing when you consider the ridiculous 357% duty on imported wine.)

China: This is the great mystery. Statistics are hard to come by, but interviews with F&B managers at hotels and with people sufficiently brave to remain as importers show depressing figures. Sales have slumped because of the tourism slump. Also, China is now producing much more domestic wine (some of it drinkable) which fights for shelf space with foreign products. In 1997, legal re-exports of wines from Hong Kong to China were 2.3 million cases, which last year collapsed to 200,000 cases.

Hong Kong: French sales have dropped to 43%, according to the French trade organization Sopexa. In this sophisticated market, Australian wines now account for 18%, Californian 10%, Chilean 7%, Chinese and Italian 3%. Other importing countries are New Zealand, South Africa and a strongly emerging Argentina. Eddie Wong, manager of Sinolink Wines, says bottles with a retail price below the psychological $100 mark (US$13) will move fastest.

Exporting Source Countries:

Australia: Japan's the big Asian buyer, with sales of 4.57 million liters last year, worth US$20 million. That was down 30% by volume and by $5 million from the previous year. But growing sales to Hong Kong (1.6 million liters), Malaysia (1.1 million liters) and Singapore (1.9 million litters) helped boost Aussie confidence.

Spain: As with other countries, Japan dominates with purchases of wine last year of $25.3 million. Next came China with $13.65 million (mostly bulk sales). Other countries lag in discovering Spanish wines; Hong Kong buys $700,000 and Singapore $450,000. This could be changing as an energetic new breed of entrepreneurs start up businesses in the region, and Spanish restaurants create a niche market.

Chile: Here's the flavor of the decade for Asian drinkers. Chilean winemakers and marketers are aggressive and effective, and they make wines that seem to marry well with the Asian palate. Despite the economic woes of Hong Kong, Chilean wine sales rose from $936,000 in 1996 to $2.6 million last year. Exports to Asia last year rose a strong 24%.

Austria: Gourmets say Austrian wines are a well-kept secret; they are said to be excellent companions for Cantonese food and other delicate cuisine. Japan, Taiwan, China and Thailand are the biggest customers.

Germany: German wines have a dreadful image problem in Asia, from the time when Blue Nun and other sugary wines flooded the market. People have outgrown them. Also, most German imports are white and customers want red. Besides that, they are too expensive. It's a wonder any German wine at all is sold in Asia, but there's a certain demand by German tourists.Argentina: Unlike the slick Chileans, the Argentine trade representatives seem woeful and lackluster. They can supply few statistics, and most marketing work is done by producers working with able Asian-based wine merchants. Imports are too tiny to gauge by volume, but an increasing number of wine lovers are creating a cult demand for the small amount of Argentinian wine that reaches Asia. With proper effective marketing, this could become a significant source.

U.S.A.: In 1997, Japan bought wine worth $37 million from California. In 1998, this soared 134% to $92 million. Much of this is still sitting in warehouses, blocking any fresh orders. Other major customers are Hong Kong ($7 million sales in 1998), Singapore, Korea and China.

New Zealand: A small but significant exporter of quality wines. The famed Sauvignons blanc of the South Pacific are prized by gourmets, despite the current trends to red. Last year, sales to Japan were US$2 million, with Singapore and Hong Kong each buying about $400,000.

Italy: Has the great advantage of having Italian restaurants with enormous popularity in every city in Asia. Naturally, people eating there like to drink Italian wine. But trying to get hard figures from Italian trade representatives is as tough as being a Christian in the coliseum; your chances are not high. Italy has made very serious efforts to sell in China, pinpointing that country as having vast potential. It has staged wine fairs and trade shows.

France: Bordeaux leads, Burgundy follows, Loire has lost its luster, Rh[hat{o}]ne is scarcely known and while Vin de Pays sells well in supermarkets throughout the region, it seldom appears on reputable wine lists. Sopexa, the French trade organization which concentrates on food and beverages, does a top job in promoting French vintages. It organizes constant wine tastings and dinners with visiting producers, takes wine writers and decision makers in the trade on vineyard tours to France, and is active at every F&B show in Asia. The French do not rely only on their reputation and their name--they work hard on sales and marketing and fight tenaciously to keep their grip on the market. They are tireless marketeers, and jealously protect valued names like "Champagne" from being copied by other producers. Luck may have got them on top, but it's hard work and investment of time and money that keeps them there.

Portugal: Having been sailing, plundering, settling and trading in Asia for 500 years, you would think the canny Portuguese would sell more of their excellent wines in the region. Alas, no. The tiny former colonial possession of Macau buys good quality wines, but in many parts of Asia, all you can see of Portugal's production is the ubiquitous Mateus ros[acute{e}] and the occasional good bottle of port in a top hotel restaurant. Even in neighboring Hong Kong, just 40 miles across the Pearl River estuary from Macau, it's virtually impossible to find a good red wine from Portugal, although the British heritage in Hong Kong has created a fondness for fine ports. Japan bought $6.6 million worth of Portuguese wines in 1998, much of it port. Hong Kong bought a tenth as much.

South Africa: Exports to Hong Kong show graphically the way the wine buying frenzy to Chinese markets exploded, then subsided in the late '90s. In 1996, the country sold US$67.9 million worth of wine in the city. This more than doubled to $137 million in 1997, then dropped back to $71 million in 1998 and to $57 million in 1999. South Africa was subject to trade bans in many countries during the apartheid era, so a developed taste for the wines in places like the Philippines and Malaysia is comparatively recent. Well-priced even for top quality vintages, the Cape wines are popular with young people. Marketing is patchy, with much depending on the energies of trade officials and diplomats in various countries. There seems no unified South African wine industry drive to sell in Asia.

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