Few had survived China’s fast-changing and precarious wine market. Navigating government regulations and the country’s notorious ‘Ganbei’ or ‘bottoms up’ culture at business dinners is not for the faint of heart or liver. Alberto Fernandez, Managing Partner of one of China’s biggest wine importers, Torres China, is an exception.
This year, Fernandez is celebrating 20 years of working in China’s wine industry. Fernandez arrived in China in 2000 at a time when the country’s wine market was still in its infancy. Back then, as he recalls there’s still a fair amount of “naivety”. Like the country’s economic transformation in the past 20 years, its wine market also fast-tracked growth. In this interview, Fernandez, a seasoned China hand, shares his observations on the market, why food and wine pairing doesn’t work for China, his frustration with counterfeit wine, and how coronavirus pandemic is changing China’s wine market dynamics.
Twenty years ago, what led you to wine and particularly to the wine world in China?
Since my days in university I always had an interest to live one day in China. I followed closely the ‘90s economic boom and I even studied Chinese language for a few months. But I actually started working with wine in Australia in 1998, and upon my return to Spain in early 2000 I got hired by the Torres family to join their Export Department.
Just a few months later the Torres family offered me the position to lead their tiny operations they had in China. Basically the decision was made because in late ‘90s nobody in Spain wanted to move and live in China… I was the only candidate somehow!
What was the wine trade like in China back then?
It was so tiny. Chinese consumers didn’t drink imported wine, just local wine sometimes. The duties and taxes were so high that we had to bottle wine in China in order to reduce same tax exposure. Only a few hotels, restaurants and bars in primary cities next to some local department stores sell wine. Prices were outrageous and we used to count orders by bottles.
There were only a few importers, mainly owned by foreigners, and each of them thought they will be the wine emperors of China… Imported wine’s market size in China in 2000 was about one third of Hong Kong’s, and there were so many white wines turning orange color everywhere after so many overstocks created by 1997 financial crisis.
Would it be fair to say 20 years ago, China was a wasteland for wine?
It was a “promise land”… as everything was yet to be done for imported wine. But of course, many times it was quite frustrating as there was almost no media to help to boost wine culture, there were no wine educators, and most Chinese at that time could not even obtain tourist or business visas to go abroad. I remember most of our events at that time were only attended by foreigners, and maybe one or no locals.
What is the most defining moment for you working with Torres China?
My mission when I left Spain was to turn the ship around in China. We had been dragging losses since 1997. I arrived in May 2000 and in early 2002 I decided to change completely the way we were distributing our wines. That decision proved right and in less than 2 years we started making profits. From four staff I had in 2000 we grew into hundreds over the years. Those years of thriving business and great results one can never forget.
What was the first thing or event that affirmed you moving to China and working in wine industry was the right decision?
Maybe in 2003, when we started to build a powerful portfolio of family-owned wineries like ours. The feeling of enlarging an international selection of great wines from great houses made me feel that I could never achieve that anywhere else in the world… I was not even 30 years old back then! On another note I have been truly excited contributing in the expansion of local producers such as Grace Vineyard or later on creating along with my team Silver Heights brand, both still making some of the finest wines in China.
If you have to compare the wine market today in China and 20 years ago, what has fundamentally changed, and what hasn’t?
The market has become one of the largest in the world. The number of importers, distributors, retailers today is unlimited, and everything is moving online and fast.
Foreigners dealing with wine have become a bit of “endangered professionals” as today so many local professionals have studied wine abroad and are able to communicate wine knowledge with local consumers much more effectively than us. But some of us still got some charm… oh yeah!
The market for mainstream wines is huge today, so is the market for niche wines. Consumers have traveled around the world and like to taste different things in different seasons.
However, complexity in doing business and developing business has somehow not changed!
Was life easy at first when moving to China? What was the biggest adjustment and culture shock if there’s any?
I have always resided in Shanghai, and here probably is where Europeans like me can adapt more easily, as it is very cosmopolitan and international even back in 2000. Life in 2000 was very cheap except for going out to western restaurants and buying wine.
I remember life of people at that time being happier and easier than now. There was an aura of naivety and happy smiles in almost every city.
Biggest adjustment was probably becoming patient, taking things easier and accepting that the local understanding of things cannot be judged with foreign eyes or thinking. This is a principle one must stick to as a foreigner in any country.
After 20 years living in China, has your tolerance of the fiery baijiu improved?
I cannot grow the tolerance even with frequent and heavy practice:)
What are the misconceptions people often have about the wine market in China? What surprised you about the market?
- China market is one market only.
- Food pairing with Chinese cuisine is so important.
- What works in “my country” will work in China.
- What works in Japan will work in China sooner or later.
- Putting more attention/resources to on-trade market than off-trade market.
- and that Rosé will have a revolution here….
What surprised me most about China market is in line with what surprised me also most about China. When I landed here I thought it would take 30-40 years for this country to somehow develop, but they did it in about 15-20 years only!!!.
Is there anything that frustrates you when looking at wine market growth in China for imported wines or domestic wines? What do you think that needs to be changed for the better?
The low or no respect on pricing and intellectual property rights. Those two need to be changed drastically. Cannot be that many companies like ours in China are investing and employing many people but have no protection against parallel importers, trademark violators, etc.
What’s the next 20 years for you?
My wife knows… 😊 But we have to raise two girls and when they go to university probably, we will move to Europe. By then I will be 54 but having my professional life so much linked to China I guess I will always serve as a bridge between wineries and Asian markets.
With the coronavirus pandemic, how do you see it change the way wines are consumed or traded?
It has brought deeper and heavier reliance on online activities around wine. It has also reduced spending on wine, and everyone is trying to make consumers drink more often at home, though we all know this will take more years as gaining habits takes time.
And trust will help to revise the foundations of all businesses.