Charming Chinese wine buyers


When 45 alumni of Tsinghua University, the alma mater of China’s previous two leaders, stopped at La Motte vineyard near Franschhoek two years ago, they ordered R1.5 million of wine to take away.

That spurred chief executive Hein Koegelenberg to tap the Franschhoek valley’s Huguenot heritage to challenge the dominance of French vintners in China.

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Hein Koegelenberg, chief executive officer of La Motte vineyard, poses in this handout photo taken in Franschhoek, South Africa, 2013, and released to the media on Monday, June 30, 2014. La Motte and neighboring LeopardÕs Leap vineyard, which La Motte Chief Executive Officer Koegelenberg owns jointly with his wife, are drawing on FranschhoekÕs Huguenot history to break into ChinaÕs premium wine market, he said. Photographer: Charles Russell via Bloomberg
EDITOR'S NOTE: NO SALES. EDITORIAL USE ONLYVines grow at the La Motte estate vineyard, Franschhoek, South Africa in this undated handout photo released to the media on Monday, June 30. 2014. La Motte and neighboring LeopardÕs Leap vineyard, which La Motte Chief Executive Officer Koegelenberg owns jointly with his wife, are drawing on FranschhoekÕs Huguenot history to break into ChinaÕs premium wine market, he said. Photographer: Charles Russell via Bloomberg

Koegelenberg, brother-in-law of Richemont chairman Johann Rupert, plans to boost exports to China by 25 percent this year after, in August last year, he lured the first Chinese investors to the country’s wine industry.

“China has the biggest market potential by far,” Koegelenberg said in an interview at La Motte, which is owned by his wife, Hanneli. “We planted vineyards at the same time as those in Bordeaux and South Africa is producing some of the best wine in the world.”

Koegelenberg turned to Asia after the credit crisis derailed his plans to work in the US. While a crackdown by President Xi Jinping on corruption and the practice of gift giving hurt Chinese wine sales last year, the nation’s consumers overtook the French to become the biggest drinkers of red wine in the world, according to Vinexpo, an exhibition organised by the Bordeaux Chamber of Commerce and Industry.

“Gifting is still huge, but you have to identify the right people,” Koegelenberg said.

His biggest clients are two Chinese entrepreneurs living in Malaysia, who each buy 500 bottles of Hanneli R, which costs up to R1 000 a bottle before loading at Cape Town.

“It can only be expensive if it’s exclusive.”

La Motte and neighbouring Leopard’s Leap vineyard, which Koegelenberg owns jointly with his wife, were drawing on Franschhoek’s Huguenot history to break into China’s premium wine market, he said.

Koegelenberg also used former president FW de Klerk to market wine, selling 10 000 magnums of Presidential Reserve for $35 (R370) each to his Chinese distributors.

“It’s a win-win,” he said. “People like to have pictures taken with the president.”

French producers account for about 45 percent of China’s $1.5 billion wine import market, triple the share of second- ranked Australia, according to the Paris-based International Organisation of Vine and Wine.

South African winemakers, with 2 percent of the market, had a lot of ground to make up, Koegelenberg said.

“We are nowhere in China,” said Koegelenberg, who plans to increase shipments by a quarter to 1.75 million bottles this year.

La Motte, Leopard’s Leap and the latter’s L’Huguenot brand joint venture with Yangzhou Perfect of China accounted for more than 25 percent of South African wine sales to China, he said.

South Africa is the world’s 11th-biggest exporter by value in a ranking led by France and Italy, according to the International Organisation of Vine and Wine.

The UK, Sweden and Germany were South Africa’s biggest export markets for bottled wine in the 12 months to May, with China ranked just ahead of Angola in 10th place.

The Chinese Communist Party’s quest to restore discipline among its ranks has led to a campaign to stamp out gift giving and extravagant official spending, hitting Swiss watchmakers, expensive restaurants and premium wine. South African wine sales in China fell 29 percent to 5.5 million litres in the 12 months to April from a year earlier, according to industry association figures.

South African winemakers did not have a high profile in China, where the focus had been on marque French products, said Fongyee Walker, the co-founder of Beijing-based Dragon Phoenix Wine Consulting, which educates Chinese consumers and advises wine associations.

“They traditionally went for wines that are the equivalent of Chanel and Gucci,” said Walker, adding that Chinese consumers were increasingly asking for mid-range products as they became more educated.

“There are South African wines that will appeal, including Pinotage, which is one of the few that Chinese people can describe because it smells of coffee.”

The new Chinese focus on price and quality over status may help, according to Wines of SA, which is planning to open an office in Hong Kong to better access the Asian market.

Oldenburg Vineyards, a boutique producer near Stellenbosch owned by former hedge fund manager Adrian Vanderspuy, was also targeting China with wine made from its Bordeaux and Rhone varietals, said regional sales manager Raymond Noppe.

“France was and is the number one, but Chinese consumers are looking for alternatives,” said Noppe. “More and more affluent people are becoming educated about wine.”

Oldenburg was looking for a distributor to provide access to retail and restaurant outlets in China, said Vanderspuy.

“One of biggest things that will lift the South African boat is the whole tourism angle,” he said. “People are seeing Cape Town as the new San Francisco and Stellenbosch as the new Napa.”

Tourists from China climbed 15 percent to 151 847 last year, making them South Africa’s biggest group of foreign visitors after the British, Germans and Americans.

To build the L’Huguenot brand, Koegelenberg has offered incentives to its network of distributors in China, flying more than 1 000 of them to South Africa for holidays. The distributor, Perfect China, bought 51 percent of a cellar and vineyard on the Val de Vie estate Franschhoek in August.

Koegelenberg stresses the importance of wine tourism and has added a restaurant, and flower and organic vegetable businesses to the La Motte estate. Leopard’s Leap has a cooking school and hosts a literary fair.

“Tourism is really important to us… We create stories because wine is an emotion.” – Bloomberg

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