Yinchuan, destined to be China's wine capital

Yinchuan has attracted plenty of investment in its wine-making center at the foot of Helan Mountain. [Photo / China Daily]

Another encouraging sign of growth in domestic wine consumption occurred in China's second- and third-tier markets last year, when sales of Chinese wines overtook sales of foreign wines for the first time, both by volume and value. Total revenue from sales of Chinese wines reached $129 million in second- and third-tier cities in 2012, according to a report by the China Alcoholic Drinks Association in Beijing.

Yuan Hong, general manager of Yinchuan Yuma Winery Co Ltd, another large winery in Yinchuan specializing in producing cabernet sauvignon and merlot, says his company is preparing to open a grand chateau-style winery and visitors' center next year, as part of the company's promotional strategy.

"It is important for us to quickly step up promotional and marketing activities and thereby garner more customers throughout China, because the country does not have a wine tradition," says Yuan.

"I began producing wine in 2005. Many wineries in China are modeled on French wine, but I don't follow this. Chinese winemakers need to pay more attention to developing their own winery culture, otherwise the products they sell will always be cheaper than imported wine even though some foreign wines taste quite flat."

To improve grape quality, Yuan's company also provides contracted farmers with technical know-how and instruction.

"Local farmers tend to sell us the best grapes because our prices are based on sugar content - prices for grapes that are rich in sugar are higher than the market standard," Yuan says.

With prices ranging from 300 yuan to 1,200 yuan a bottle, the company's sales revenue reached 82 million yuan in 2012, a 13 percent increase from a year earlier. China's western region is its main market.

China's major winemakers - such as Changyu Pioneer Wine Co Ltd, China Great Wall Wine Co Ltd and Dynasty Fine Wines Group Ltd - have all set up production bases in Yinchuan to diversify their products. Four wineries in this area are either foreign-owned or joint ventures.

In Yinchuan two months ago, Moet Hennessy, the wine and spirits unit owned by French luxury group LVMH, announced it would establish the first winery in China dedicated to the production of premium sparkling wine. Its first bottle of sparkling wine will be released in 2014.

"The winery will not only help support our group's overall business in China in the future," says Christophe Navarre, chief executive of Moet Hennessy, "but it also indicates our long-term vision for the China market."

Close to Helan Mountain with an operational area of 6,300 sq m, the winery will follow the company's worldwide procedures to ensure it produces quality sparkling wines.

Mark Bedingham, the managing director of Moet Hennessy Asia-Pacific, says the sparkling wine produced in Yinchuan will initially satisfy local demand but will eventually be exported.

"The wine market in China is booming," says Bedingham. "The new winery indicates another significant milestone in Moet Hennessy's continued efforts to help develop wine in China.

"New products are targeted at China's young adults who aspire to a high-quality lifestyle.

"In most of the world's major wine markets, sparkling wine accounts for just 0.9 to 3 percent of total demand. But 1 percent of China's wine market, which is still increasing, is a really big number."

Indeed, China is on track to become the seventh-largest wine buyer in the world this year, after countries including the United States, France, Italy and Spain.

Chinese consumption is expected to rise 32 percent to about 1.3 billion bottles from 2009 figures, said a report by Vinexpo, an organization that hosts international wine and spirits trade exhibitions in France.