Penfolds toasts China potential

Australian vintner latest foreign firm to eye production in Ningxia Hui autonomous region

Though China might still be better known as a producer of fiery baijiu liquor, its clout as a winemaker has been steadily growing over the years as more and more vineyards sprout up in provinces like Gansu and Shandong, as well as in the Xinjiang Uygur autonomous region and the Ningxia Hui autonomous region.

In September, the nation welcomed another milestone when major Australian wine producer Penfolds launched its first made-in-China wine that is part of its new One by Penfolds range, which features wines made across the world.

Stored in a bottle designed by renowned artist Ori Toor, the 2020 vintage is a red blend made in Ningxia with the region's grapes, and will only be available in China. Its launch served as a prelude to the global launch of the range in mid-2023.

"For a long time, we've had the ambition to make Penfolds wines in China, where there have been obvious developments and progress in terms of the industry and the quality of the wines in recent years," said Tom King, Penfolds managing director.

"We're now for the first time releasing our first trial line from Ningxia and feeling optimistic and confident that over time we will be able to scale that and bring something more meaningful from Ningxia."

This isn't the first time that a foreign brand has released a wine sourced and made in China. In 2016, luxury group LVMH raised eyebrows when it launched a Bordeaux blend produced near Shangri-La in Yunnan province.

The Ao Yun 2018 vintage even went on to win acclaim, earning a score of 98 from renowned wine critic James Suckling — the highest score he has ever given to a Chinese wine.

"Today, Chinese wine is not only recognized and loved by more and more Chinese consumers, but also continues to be the focus of attention in the international wine industry," said Wang Qi, executive director of China Alcoholic Drinks Association, pointing out that the launch of One by Penfolds is an excellent example of this.

"Increasingly, we see international wine companies and professionals taking root in China's wine-producing areas, exploring Chinese terroir, and working with local companies to inject vitality into the sustainable growth and development of China's wine industry," Wang said.

About 90 percent of the wine consumed in China is produced locally and more than 60 percent of wine grapes planted in China are Cabernet Sauvignon, said Fongyee Walker, the founder of Dragon Phoenix Wine Consulting School.

Based on the 1995 discovery of 200 clay vessels that had traces of grape wine in Shandong province, China has likely been making wine since around 2,600 BC, but it wasn't until the last decade that consumption became mainstream as cellars stocked with wine from across the world started emerging in cities like Shanghai.

In 2021, China consumed more than 1 billion liters of wine, making it the seventh largest wine consumer worldwide. The nation is tipped to become the world's second-largest wine market by 2023 with an estimated 52 million regular wine drinkers.

"One reason for the increasing consumption of wines from Chinese regions is because the quality of the wine is getting better and better. Consumers will buy wine only when it is good," explained Wu Mingfeng, Penfolds China's general manager.

"In addition, online channels have also grown rapidly in the past few years. At the same time, due to the new retail form, sales of offline channels have not decreased. Consumers have more diversified choices in purchasing wine," Wu said.

Looking ahead, King believes Ningxia has huge potential to become a leading wine-producing region.

"We've spent many years bringing our winemaking team to China to explore different regions and recently we've landed and identified Ningxia and Shangri-la, two regions where we believe we would be able to make Penfold wines," he said.

"Besides the suitable climate and the topography of the land of grape growing and winemaking, it is now the center of China's wine industry. A lot of the investment is being put into the region from both the government levels and private enterprises. We're going to see a continued increase in the quality of the land and the wines that are ultimately produced in Ningxia," King added.

In September, the Ningxia National Open Development Comprehensive Pilot Zone for the Grape and Wine Industry was established, another indication of the region's growing focus to bolster the development of this industry.

To coincide with the launch of Penfolds' first China-made wine, the company has partnered with the China Agricultural University to establish a student fund and academic exchange program that supports winemaking and viticultural studies for local winemaking talent.

"In addition to merit and need-based financial assistance with tuition, we are pleased that the One by Penfolds Student Fund will also support academic and cultural exchanges, wine education materials, and access to wine samples from around the world for students to expand their learning," said Li Tianhong, dean of the College of Horticulture, China Agricultural University.

"As a university with a global mindset, we welcome continued collaboration, such as this partnership with Penfolds, that takes a long-term approach to empower the local winemaking community and incubating talent for China's wine industry."