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US wines talk to the Chinese, with an American twang: Maryhill Winery

By Ben Bouckley+

11-Mar-2013

The owner of a Washington State winery says that Chinese wine consumers in the ‘middle ground’ are hungry for affordable US wines that assure them a quality that native products often lack.

Maryhill Winery sent its first shipment of wine to China last November, and owner Craig Leuthold (pictured with his wife Vicki) tells BeverageDaily.com that the state is now the US No.2 in terms of per capita wine consumption.

Founded in 2001, Goldendale-based Maryhill produced around 92,000 cases in 2012, has a turnover of around $4m and a portfolio of almost 40 wines, and Leuthold said the company would make efforts this year to gain a US-wide footprint, where it currently sells wines across 20 states.

French wines are the most popular and synonymous with quality in China, and have been sold there longer than those from other world producers, but Leuthold said the growth of Californian wines, for instance, had been “astounding”.

“What we forget is what an unbelievable huge market it is, in terms of the number of consumers who are hungry for foreign products,” he said.

“The Chinese don’t really have a domestic wine industry in the modern sense of the word. Yes, they make wine, but the quality has a long way to go.”

Although Maryhill’s principle preoccupation is with what he calls the “low hanging fruit” of the US wine market, alongside the occasional export to Canada where high import tariffs are prohibitive, Leuthold said that exports to China began upon the basis of a personal relationship.

No trust, no sales...

One of Maryhill’s wine club members works for Supply Source in Portland, where the owner of that business maintains a list of US-made products for export to Southeast Asia and, principally, China.

“He has Chinese nationals to represent his products in China, and he has also strategically hired people who have links to the government, so some of the traditional trade barriers, the customs issues, things that are difficult and take time are just a little easier,” Leuthold said.

Just over 12 months ago, Supply Source brought its Chinese distributors out to Maryhill Winery, he added, and since then the relationship had developed.

“I heard that relationship was very important to the Chinese, and that they won’t buy from people who they don’t trust. We worked through it last summer, and we took them through our wines,” Leuthold said.

He added that the Chinese distributors chose Maryhill’s main production wine in the States – a blended winemaker’s red mixing Cabernet Sauvignon, Merlot, Syrah and Cabernet Franck grapes, “Bordeaux with a twist” – upon the basis of its broadest appeal to native consumers.

“They also thought it would hit a price point that seems to be the middle ground. The Chinese customer base is incredibly diverse. There is plenty of cheap, ubiquitous wine being sold in china but also some incredibly high end Burgundies, Bordeaux.

“But then here is this emerging middle class, a group of people who really want better quality, and there aren’t many wines that fill that niche, although Australia has done a particularly good job.”

Hungry for better quality wine

The cheapest wines in China retail for around $12-15, but Leuthold said that Maryhill’s sells for $25-30 (where import duties almost double the wine’s cost when it lands) while it is sold for $10-12 in the States, in the lower end of the red blend category.

“The Chinese market is hungry just for a better quality product, something they can call their own,” Leuthold said. Our distributor actually took word-for-word what was on the label and translated it into Chinese, on a label on the back of the bottle.

He added: “Our Chinese distributors told us that Chinese consumers really want identifiable American products, and want to understand then. They told us to keep our front label identical, because consumers want it to say ‘Colombia Valley’ or ‘Washington State’.

“They want all these things to be identifiable because there are so many fakes out there. They want legitimacy from the product, to be sure that it is what it is.”