Can a Chinese Penfolds help Ningxia sell its award-winning wines? Also, as the world wine trade descends on that region, here are few angles to consider. If you like this newsletter, please pass it on.

Greetings from China,

Where the wine expo / international tasting / sommelier competition / academic conference / "we only just met but you feel like an old friend" sessions are starting in Ningxia while I type away in Beijing.

Two full posts below. It's been far easier for Ningxia to win medals and praise than to actually sell its wine. Can a big new brand—a Chinese Penfolds—change that? My look at the rise of Pigeon Hills.

But first: tasting wine, doing tours and hob-nobbing with local personalities is fun but Ningxia's wine industy has serious issues to consider. Like, where will the tourists come from? And the wine sales? And how much money is involved?

Finally, it takes time and money to create content like this, so please support Grape Wall via Paypal or WeChat to help offset hosting, domain name and other costs.

Cheers, Jim Boyce
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Ningxia Stories

Trade people from the world over are in Ningxia for the annual wine expo. They'll visit wineries, taste the local drop, listen to speeches, receive lots of praise and meet officials who most of them will only remember as a surname. Fun stuff. Here are five wine angles to also consider.

Intriguing People

The same wine personalities tend to get covered over and over again in Ningxia. That's natural. I have done the same thing and helped others do it, too, by setting up interviews. Here are a few people who deserve more attention:

  • There is lots written about women making wine in Ningxia but little, at least in English, about Zhou Shuzhen (周淑珍). She has been at it for some 30 years, far longer than most, and consults at what are arguably two of Ningxia's five best wineries: Kanaan and Legacy Peak. More about her here.
  • Sun Miao and Peng Shuai of Chateau Aromes both studied in Beaune, are finishing their oenology degrees in Ningxia and are keen about making natural and biodynamic wines. More on them here.
  • Zhang Yanzhi (张言志), a Bordeaux-trained winemaker and the founder of distributor Easy Cellar, now heads Pigeon Hills, a sprawling winery with access to the region's biggest plot of old vines and that might be seen as an attempt to create a Chinese Penfold's. Operations chief Liao Zusong is also an important part of this story. More on both below.

Where are the sales?

Making wine and selling wine are very different things and the latter has not been easy for Ningxia. One issue is trust: bad experiences with local wines and good experiences with imported ones have made many Chinese consumers wary of trying more home products.

Things are doubly tough given many top Ningxia wines are priced at rmb300 or far more while equivalent imports cost less. Thus, at the very moment some Chinese wines are excelling in terms of quality, the share local producers have of the market has been falling. See here for a breakdown.

To create trust, and thus help justify the prices, Ningxia has amassed medals—reportedly more than 500—in local and international contests. A steady flow of global wine trade members, including critics, journalists, winemakers, viticulturalists, investors and more have been wined and dined. And now there are efforts to supplement boutique wineries with big brand leaders, including the Pigeon Hills project covered below. This issue of the gap between making wine and selling wine is a pressing one, especially for wineries that need cash flow to survive.

Where are the tourists?

I've made dozens of Ningxia winery trips over the years and—except at the stunning Yuanshi—have seen few visitors save those needing a fancy backdrop for wedding photos. Yes, there are winery events with lots of attendees but I'm talking about everyday visits.

At the same time, the wine authorities report there were 350,000 "tourist arrivals" at wineries in 2016. How are those counted? And where have these people been when I visited!?

There has been some buzz about a Ningxia wine car on the Beijing-Yinchuan train. Such an initiative will raise the region's profile but, with just 28 spaces, won't fill 86 wineries. And it won't help those simply trying to visit on their own and finding winery gates locked. Or being unable to buy the wine at some places that are open.

(Quick aside: I joined a media tour in May. We were tasting in the back at Kanaan, one of Ningxia's top wineries, when a friend sent a photo of... Kanaan? He had driven there on his own and wanted to know how to buy wine. I went up front and, once our surprise at both being there subsided, we had to find a staff member and then find the prices—no tags on the bottles—so he could get some wine. It seems easier to buy Kanaan near my home in Beijing, or at Dan Murphy's in Australia, than at the winery itself.)

So, what are the prospects for a boom in wine tourism in Ningxia? Will it be easy? Hard? If that wine train does well, can more cars be added? How much will the high-speed rail, once it connects to Yinchuan, help? Ningxia has a small population, and is one third Muslim, and would seem to need outside visitors. But it has to attract them while other regions, like Huailai near Beijing, are rising and much closer to major population centers. This is a pressing situation that needs critical analysis.

Show Me The Money

Putting Ningxia on the world wine map has required money. Lots of it. For conferences, contests, festivals and fairs; for infrastructure to support wineries, a nursery and a huge bureau building; for fact-finding missions and promotional tours; even for bonuses for medal winners, with the 2016 wine handbook listing rmb500,000 for golds in the Helan Mountain International Wine Fair and rmb300,000 for golds in international wine contests.

Ningxia ranks among the poorer places in China and wine is a value-added product that can improve the living standard. This also fits a need to improve inland areas versus the more prosperous coastal ones. There is little doubt that the Ningxia wine industry has grown by leaps and bounds and It would be interesting to see a breakdown of the costs, the revenues and the benefits to the average citizen.

Beyond Cabernet

China has been devoted to Cabernet to the extent the industry is somewhat a one-trick pony. In a nation where buyers have a world of regions and grape varieties at their fingertips through online buying, local producers have planted themselves into a corner with a focus on one variety. But this is changing.

There has been lots of talk about grape diversity in Ningxia over the past decade. It seems everyone and their sibling has now planted Marselan, with some impressive results. I've also heard of more and more Malbec going in, tried several Pinot Noirs and Petite Verdots, plus a stunning Syrah on my last visit, and just saw on WeChat a person working Viognier. And there are more.

While the amounts are small, they at least open the door for figuring out what works best where in a region spread across hundreds of kilometers. So, what's planted? What's working? What's not planted yet that might do well?

Coop d'etat: Pigeon Hills

Little is written in English about Pigeon Hills (西鸽酒庄), a new project that might well transform China's promising Ningxia wine region. Many trade visitors to Yinchuan have heard the "small winery, large area" spiel in recent years, the idea of settling a 200-plus kilometer north-to-south swath of Ningxia with boutique operations. There are at least 86 functioning wineries there now, most of them small, many racking up medals at contests here and abroad.

Pigeon Hills is not part of that. The powers that be, concerned those medals haven't meant much higher sales, saw the need for some big leading brands, too. Pigeon Hills has risen from the dust in less than a year with 10 million liters of tanks, a fermentation capacity of 6,000 tons and cutting-edge equipment.

Call it an attempt at a Chinese Penfolds, at creating a widely-known brand that consumers trust—and trust is key with consumers—and that makes both top-flight labels and large amounts of inexpensive wine for middle class buyers.

The project is headed by Zhang Yanzhi (张言志), a Bordeaux-trained winemaker and founder of importer / distributer Easy Cellar, which handles the likes of Penfolds Max. That gives Zhang an outlet for building the Pigeon Hills brand and moving its wines. The financial means are there, too. Chinese reports state Pigeon Hills is backed by 300 million rmb raised with the help of the region's Wine Trading Expo Center.

Liao Zusong (廖祖宋) is in charge of operations. A former assistant winemaker at Shanxi's Grace Vineyard, he has spent time at Bass Philip and Mollydooker in Australia. More recently, he has made wine at another of Chang's Ningxia projects, Guanlan. (Liao is also a translator, including the book The Taming of the Screw by Tyson Stelzer.)

Liao met me at Yinchuan airport on a sunny April day this year and we headed to Pigeon Hills. I'm not sure who was more tired. A party the night before meant no sleep for me except on that early morning flight. And Liao had the day-to-day weariness of managing a huge project and being a new father. A friend of Liao's happened to be on the flight and joined us.

We recharged with lunch in Minning, a historically relevant town named for Fujian province (also known as Min) and Ningxia. China's President Xi Jinping visited the region in 1997 as a Fujian official, on a mission to reduce poverty, and one idea was to relocate residents to Minning from harsher areas. The vineyards we drove to after lunch were planted the same year, making them ancient by local standards and seemingly shrouded in fate.

Pigeon Hill only just started using those vineyards of some 1,000 hectares. They were also used for the second Ningxia Winemakers Challenge, held from 2015 to 2017 with 48 contestants from 17 nations. Backed by the wine authorities, that project gave each contestant three hectares of grapes and leeway on harvesting and wine-making. The ensuing wines showed the diversity possible from this land.

(I recently dreamed of clever Ningixia people sitting around a table and repeatedly tasting those 48 wines, made by their "old friends" from abroad, in an attempt to squeeze out the secrets of the vines. Maybe to make the "Grange" of Pigeon Hills?)

Anyway, if Pigeon Hills is able to make good inexpensive wine, say that retails for rmb100 or less per bottle, what happens to those boutique wineries with far younger vines and higher prices? Does Pigeon Hills increase consumer demand and, in turn, help everyone else in the region? Or does it create price pressure that wipes out some smaller players?

We arrived at the vineyards to find workers uncovering the vines, waking them from the five-month dirt nap that offers protection against the cold dry winter weather. Burying and uncovering vines is a time-consuming process that kills some plants and adds another challenge to making good inexpensive wines for the broader market.

We then drove to the winery, passing a plot of newly planted Malbec. Pigeon Hills is a circular site, with the perimeter defined by a high stone wall. Inside the grounds, a crew had used a backhoe to lay large trees lengthwise on an empty plot. A scene defining work in progress.

We headed to the winery. The main production area has a 4,000-ton capacity, with 42 each of 40-ton and 60-ton tanks. A smaller area next door, for superior wines, has plenty of 10-ton and 15-ton tanks.

Liao said a thousand barrels were already in use for the 2017 vintage. He showed us loads of equipment, from extra-wide sorting tables to a German press to a phone-based tank monitoring system by New Zealand company VinWizard. (A tight relationship exists between Pigeon Hills and New Zealand, with that country's ambassador to China visiting in February.)

We then got down to tasting: Cabernet Sauvignon, Cabernet Gernischt, Petite Verdot, more. From barrels, from tanks. Swirling, sniffing, sipping. Liao seemed distracted, an understandable position given he was trapped tasting juice with a dead-tired Canadian instead of checking off a long list of tasks. We wrapped things up.

Liao would need all of his focus to complete the tasks ahead, ones that could have repercussions not just for Pigeon Hills and Ningxia but for China wine as a whole. As if a signal of the pace required, we left the winery an hour after entering to find six trees already planted in the yard.

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Note: This newsletter content is general information. I make no guarantee as to its completeness or accuracy. Use it at your own risk. In other words, I try hard to be accurate, but mistakes can happen, so reader beware. Also, I'm not a fan of spam and aim to send this newsletter only to people who signed up at Grape Wall blog or agreed by email or in person to receive it. Cheers, Jim Boyce
14 September 2018
Grape Wall covers China's wine scene. Winery visits, tastings, news, reviews and interviews .Since 2007. Administered by Jim Boyce. Get the newsletter here.
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