Clubs are trump in Asia - Asian wine market - Industry Overview

Into the Better Hole pub at Luen Wo Hui recently came a friend of mine named Ah Lui. He's a Cantonese land developer and the bar is a friendly watering hole on the Hong Kong-China border. He was puffing in the '95 degree heat, carrying a mixed case of Los Boldos Chilean wine. "It's the wine of the month at the Jockey Club," he explained as he called for a cold, locally-brewed Carlsberg beer.

No more explanation was needed. If the mighty Hong Kong Jockey Club selected a special wine to serve its 15,000 well-to-do members (joining fee $15,000 and $120 a month) then it was certainly good enough for Ah Lui. And for 6.7 million other Hongkongers.

What the sporting, business and social clubs of Asia pick for their wine lists has enormous influence on sales. Appearing as a monthly special gives a wine gigantic prestige and ignites a space rocket under retail sales.

Make no mistake, the clubs of Asia are immensely fertile soil in which to plant new wines. American winemakers should ask their distributors what efforts they have made to get their vintages on such promotions. It's a virtual guarantee of significantly boosted sales and a stamp of approval in the minds of the consumer.

The reasons go back into the colonial past. In regions dominated by the British, from India to Hong Kong, the wealthy merchant classes were swift to establish private clubs. These were often snobbish retreats where the civil servants and businessmen, who between them ruled the empire, could take refuge over a Singapore sling or a glass of claret. "Locals" were usually banned. Such places came to be regarded as oases reserved for the elite; whatever they ate or drank must be the best. In reality, the food was usually appalling, heavy British fare unfit for tropical climates.

In French possessions, tennis and sports clubs played the same dominant social role as did business clubs in British territories.

At places like the Royal Hong Kong Jockey Club (which has dropped the Royal from its title since going back to China's embrace) locals were more than welcomed. They were the biggest bettors, after all, and that's where the money came from.

A lasting result has seen these bastions of colonial rule (the Ladies' Recreation Club in Hong Kong is a prime example and the Selangor Club in the heart of old Kuala Lumpur is another) remain the social arbiters. So if a distributor can get a wine accepted as Wine of the Month in one of these establishments, it is a significant-and often very lucrative - aid to your marketing effort. Generally, monthly specials have to go on sale at club bars and restaurants at about US$5 a glass. This means merchants have to supply wine at about US$12, cutting many American vintages out of consideration.

"Getting your wine into a leading professional or social club is an important endorsement from a prestigious organization," say Daniel Chart, the chief representative in China of the California Wine Institute. "It gives enormous cachet to a wine."

Food and wine promotions, like the extremely successful effort held by Napa producers at the Hong Kong Jockey Club last March, also give an imprint of quality to a region.

The publicity value is impossible to estimate, but to have a wine displayed on the monthly special tent cards at the Jockey Club's scores of bars and restaurants is certainly worth millions of dollars to a wine maker and his distributor. In addition to the millionaire members of the Club, up to 74,000 keen punters throng the race tracks during meetings and, like pal Ah Lui, come away with strong impressions of what's on offer. "People are impressed by what clubs sell," Chan adds. "They are guided by the choice made by the food and beverage experts who pick the wines."

Then there is the Asian concept of "face." If a wine is sufficiently good to be offered the rich and powerful, well, it's got to be good enough for the average consumer. Look at me, I'm drinking the same Chardonnay as the chairman of the Hong Kong Bank!

Richard Paine, the knowledgeable importer who runs Fine Vintage in Hong Kong, says it's impossible to estimate in cash terms just what it means to have your wine on Jockey Club or other club lists. Certainly, it's an enormous help for both label and distributor.

It's not easy. With every wine merchant in Asia scrabbling to get wines accepted by club managers as monthly specials or promotional offers, there are usually strict procedures. In many Asian communities, particularly Singapore and Hong Kong, laws against graft are absolutely stringent. Purchasing must be totally transparent and seen to be equal and fair. Otherwise the anti-corruption squads are likely to come sniffing at the club house door.

Last month, for instance, the Jockey Club had 1997 Rothbury Estate Verdelho from Australia's Hunter Valley region as its white wine special offer. For Richard Paine to win this, he first has to be listed on the Club's roster of approved merchants. Then he had to air freight samples of Verdelhos from Australia; wines which were not already on sale in Hong Kong were specified. When Club officials had all the offerings on hand, they held a private blind tasting of their own F&B executives and key staff. When the list was narrowed down, they then called for bids. Paine's entry won.

Not only are wines sold in the Club's two sprawling race courses, two lavish club houses and its country club-a total of 50 busy outlets - but members can order and sign for wine in bottles or bulk and have it billed against their monthly membership dues.

For other clubs, members can order at the bar of the club and the wine merchant is required to deliver the orders to their homes.

It's hard work, but immensely profitable. the Jockey Club needs at least 8,000 bottles of white wine and 12,000 bottles of red wine for each monthly special.

It's catering manager, Fritz Sommerau, a Swiss, says they look for something besides Chardonnay and Cabernet Sauvignon. Pinot gris and Shiraz are frequent selections. He's also opted for Ponardo from Argentina and a Tannat from Uruguay. The Club aims for specials costing them between $10 and $12, duty paid. This is about half what it pays for listings on its normal wine lists. The exhaustive procedure gives members a wide selection. And to get onto those horse club tent cards is a wine merchant's dream come true.

The Vietnamese Market

The long French stranglehold on the Vietnamese wine market is slowly being broken. A new generation of food and beverage managers and buyers for retail outlets are now ordering vintages from many other sources. Few United States vintages, however, are being seen on local wine lists in either Saigon or Hanoi. New labels in both large city hotels and the small bistros which are springing up throughout the country tend to be South African, Australian, Chilean or New Zealand. France still predominates, but the once-monopolistic grip has been pried free.

Vietnam imposes a flat US$4.60 tax per bottle on every wine with more than 12 percent alcohol content. This helps push up the prices of mid-range vintages. But that's not the only reason many hotels are now straying outside the once-sacred fold of famous French labels. The executive chef of the Delta Caravelle Hotel, Dominique Etcheberrigaray, explains that he aims to give both expatriates and the emerging Vietnamese middle-class a chance to experiment. This means putting on an ever-changing selection of wines at prices that people can afford. In Vietnam, that means keeping prices below US$2.50 a glass. To do that, he has told Saigon's four major wine importers he wants quality at affordable levels. To get it, he's using Chilean, Spanish, Argentinian, South African and Australian brands. 'We're not prejudiced," he grins. "If it's a good wine at a good price, we'll try it."

The price constraints mean he wants wines that cost him US$7 to $10 a bottle. That still only gives him a 40% mark-up, modest by most standards. But he feels an educational as well as sales motive. If people know they can go into his bars and restaurants and find a range of exciting wines at affordable prices, well, they will flock there. "Of course, we will have a few of the famous labels, but I expect sales to be on enjoyable wines at fair prices."

At the New World Hotel, the largest in the city, Charlie Phan Van Chanh sells 1997 Sequoia Mountain Cabernet Sauvignon for $18 and feels little price resistance for Texas Escondido Valley at $29. "People like American vintages," he explains. "But it is hard to locate them."

Camargue is one of Saigon's best-loved restaurants, run by a Frenchman in an elegant old villa. Wente Chardonnay is the house white wine and two Mondavi Chardonnays are listed at $37 and $20. There is also a sizeable Australian range of Penfolds, Orlando and Lindeman labels.

A decade ago, the wines most easily available in the country were Bulgarian. This was back in the bad old days before Vietnam opened its gates to the outside world and when the U.S. trade boycott was still firmly keeping American products (wine included) out of the country. Vietnam traded with its cash-strapped socialist comrades in Europe, sending rice to Russia and Bulgaria in barter deals which paid off in concrete and wine. That Bulgarian wine lake has now dried up and astute winemakers and merchants in producing countries from Australia to Chile to South Africa have promptly leapt in to fill the trade gap. Americans have been slower to act, although U.S. hotel groups like Marriott, Renaissance, Hyatt and Sheraton are putting up hotels throughout the country and are logical platforms from which to extend wine sales to an increasingly healthy economy of 65 million people.

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