Reading the March 12, 2018, edition of The New Yorker, I came across a piece called “The Spreading Vine” by Jiayang Fan. The article highlights the Chinese government’s concerted effort to expand both the consumption and creation of wine in China.
Although the effort is nascent, through a series of initiatives and focused investments China has largely transformed a country where only a few years ago wine wasn’t even readily consumed into one with nearly 40 million new wine drinkers.
At the same time, turbo-charging its vineyard development efforts so that now China has more acres planted in wine grapes than any other country besides Spain. Wine production isn’t far behind, with China now being the seventh-largest producer of wine on earth, the article says.
With most of China’s wine ties to the French, one might also assume there were tight wine links to the Napa Valley, with many of the new Chinese wineries having names such as Grace Vineyard, Maykama Vineyards, Silver Heights, Domaine Helan Mountain, or Chateau Bacchus. But you’d be wrong. And to prove it, as of March 11, 2018 the Napa Valley (or California or even America) isn’t even listed on the Decanter—China website within the list of “All (wine) regions” of the world.
In my experience, there appears to be a single universal characteristic of financially successful people — they want to win. When I was at Harvard, what struck me most — besides the stunning privilege and intellectual might around me — was that everyone there knew how to win. They might have won at being the best in their high school or best in their class. Perhaps their parents had won by donating huge sums of money to the endowment.
But just as likely was that the students had found a way to win themselves, either creating a not-for-profit organization that helped the poor or developing some new app for the phone that had created a multi-million-dollar company before they were 18 years old with the proceeds going to — you guessed it — the poor.
When I dug a little deeper, I often found a cynical recognition that the point of all this was to get into a “good” school (read: Harvard, Stanford, Yale) with the hope of then going to McKinsey, Bain or Goldman Sachs and from there joining a wildly successful startup or venture capital company where they might become rich and then strike off on their own, funding companies of their choice.
Make no mistake, this is not a feel-good, “let’s gather around the fire together and sing songs” kind of strategy. This is often a brutal, winner-take-all approach that is neither sentimental nor driven by anything other than conquest. The focus is winning, and the entire system — from family to university to company — often appears twisted around this singular “winning” strategy.
Has the approach of such winning resulted in stronger moral leaders, fewer poor, cleaner environments or less unfairness? Absolutely not. Has such a system contributed to creating more billionaires, resulted in more poor and also contributed to a growing divide of unfairness between haves and have-nots? Absolutely. Are these two phenomena tightly linked? Probably, but who’s going to study that? The folks at Yale? Never. Harvard? Highly unlikely. Stanford? Maybe.
Back to China.
In the mid-1700s, Thomas Jefferson traveled to France and learned to love the wines of Burgundy and Bordeaux. Thereafter, America’s third president rejected the more alcoholic wines (Madeira and Port), spirits and even beer, all of which Americans favored at the time, and instead chose to drink and serve wines of France and Italy. He hoped his countrymen would follow his example and eventually grow and make fine wines from American soil, saying, “We could in the United States make as great a variety of wines as are made in Europe, not exactly of the same kinds, but doubtless as good.”
Within a couple of centuries, America had grown into one of the world’s leading producers of fine wine, and consumption had grown to the point where nearly a third of alcohol consumers in the United States preferred wine over the crasser libations of beer and spirits.
China is lightning fast
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In the mid-1990s, the conservative fourth premier of the People’s Republic of China, Li Peng, suggested the benefits of red wine. He toasted the 1996 National People’s Congress with a glass of red wine, extolling not only its great health benefits but also how it contributed to the well-being of the society by displacing the favored hard alcohol and popular baijiu (made of grain) with what he hoped was the more sophisticated replacement of wine — just as Jefferson had done in America centuries before. The result? Wine imports in China grew 26,000 percent from 2000 to 2011, according to the New Yorker article.
But unlike in America, where the creation of fine wines and wine regions might take hundreds of years to accomplish, with the power of China’s economy and centralized government they set about to create what they hope will become the largest and most influential wine culture the world has ever seen.
Building the future of wine
If you think the world of wine is any different from the world of business, you are wrong. Perhaps you believe that if you have a good story, use some semi-organic procedures, provide some charity toward the poor and are a nice person everything will turn out just fine. Highly unlikely.
The truth is that what many in the Napa Valley believe to be an irreplaceable, unique and precious resource does not even register with many emerging markets like China. Take this comment on the Decanter—China website as an example. Buried in the site is a rare mention of the California wine market in “Californian Cabernet 2013”:
“So the 2013 wines underline the fact that Californian Cabernet Sauvignon stands at a stylistic crossroads. In the past decade, many of the state’s Chardonnay and Pinot Noir producers have embraced elegance and restraint, often with a convert’s zeal. By contrast, Cabernet has hardly changed: High-octane, sweet fruit bombs still enjoy strong domestic demand.
While that so-called hedonistic style is a financially winning proposition for wineries, it limits the appeal of California Cabernets abroad and may soon fall foul of changing consumer demographics at home. So change is coming, and it will be interesting to see what direction it takes.”
Please note that the Napa Valley is combined in this article with Mendocino, Lake County, Sonoma, San Joaquin Valley, Santa Cruz and Paso Robles, with the sense that all regions are, well, basically “California” wine country.
I am telling you without equivocation that there are those in the world wine market who are focused on a single result: winning. They’ve learned from history and from our top universities that anything is possible so long as there is singular focus on the outcome.
China can study the Napa Valley’s successes through emulating and advancing French winemaking, while at the same time eliminating or at least hindering our place in their growing world wine market. This is not a conspiracy — this is about winning. Make no mistake: just as when the French got blindsided by upstart American wineries in the last century, China is poised to do the same in the coming years.
The difference? Well, for one China has been buying up many of the world’s greatest vineyards and wineries, especially in France, less so in California. The other difference is that the Napa Valley is increasingly being relegated to the sidelines. Some think we might grow our way out of this current predicament, allowing more and more wineries with fewer and fewer restrictions. But the Chinese wineries have that already covered, with faux castles resembling Disneyland or French châteaux with 3-D murals of Pixar characters such as Nemo the fish or on-demand wine labels featuring the BMW emblem or other consumer brands alongside the customer’s name on the wine bottle.
To even compete in this case, the Napa Valley might need to shake off what have been common strategies of the past and instead develop innovative plans for the future. I recommend that those who believe we might succeed by removing more restrictions look more closely and ponder the competition.
The question is — what does the Napa Valley have that no other place in the world can ever have? Answer that question and then guard and nourish it because everything else — I mean everything — is reproducible.