Napa Valley wine brought to China
Updated: 2015-09-03 14:10
Edith Huang (left), senior director of fast moving consumer goods at Tmall.com for Alibaba Group Holding Ltd, inspects a glass of wine during a tour at the Robert Mondavi Winery in Oakville, California on Aug 28. [Photo/Agencies]
E-commerce giant Alibaba Group Holding Ltd is betting that a country known for sipping black tea will develop a taste for Napa Valley red.
The e-commerce company will offer Robert Mondavi cabernet sauvignon, pinot noir and other varieties to its 367 million Chinese customers through its business-to-consumer platform Tmall, in a partnership announced on Tuesday with Mondavi-owner Constellation Brands Inc.
Alibaba Chairman Jack Ma is fighting slowing sales growth and a struggling Chinese economy by importing popular brands such as Converse sneakers and Levi's jeans. The deal with Constellation Brands marks the start of Tmall Vineyard Direct, planned to feature wineries from around the world. Alibaba executives last week toured the Mondavi winery in California's Napa Valley, north of San Francisco, and are looking for additional partners.
The agreement gives one of United States' leading wine brands prominent placement in one of the world's fastest-growing wine markets, where US wines have been overshadowed by exports from France, Australia and Chile. Demand among Chinese consumers is outpacing domestic production, creating an unprecedented opportunity for international labels, according to an April study by the Wine Economics Research Center at the University of Adelaide in Australia.
Chinese wine consumption reached 417 million gallons (15.8 million hectoliters) last year, a 45 percent increase from 2000. The country more than doubled its acreage for vine planting in the same period, according to the International Organization of Vine and Wine.
France's labels were the No 1 wines imported by China last year, accounting for 34 percent by volume, while sixth-ranked US has less than a 5 percent, according to Chinese customs data. The value of US wine exports to China fell 7.7 percent last year to $71 million.
The Mondavi deal on Tmall will send wine labels such as Twin Oaks and Woodbridge - priced at about $15 to $20 a bottle - to China as its consumers seek middle-shelf options due to the economic slowdown.
Historically, the US has not had "a great deal of wine exports", said Tyler Colman, author of the popular wine blog Dr Vino. "It has been mostly for the prestige of saying our wines are at this restaurant in London or Copenhagen or Tokyo."
The Alibaba deal opens a new frontier for Victor, New York-based Constellation Brands, which generated 89 percent of its $6 billion in sales of beer, wine and spirits in the US in the year ending Feb 28.
Chinese tourists have been gaining prominence in Napa Valley and now account for about one-third of the 200,000 visitors to Mondavi's winery each year, said Philip Kingston, who runs Constellation's international sales. In response, the winery in 2013 began offering tours in Mandarin and Cantonese, hoping those tourists go home with an appetite for Napa Valley wines.