05.17.2011  
 

Small Winery Succeeds in China

Persistence pays off for Howell at the Moon; Napa Vintners' trade mission cements ties

 
by Paul Franson
 
napa wine china marc cohen howell at the moon
 
Marc Cohen (left), owner of Howell at the Moon Winery, first visited Shenzhen, China (right), in 2008. Since then he has joined 40 other winery representatives introducing Napa wines to Beijing and Shanghai.
 
Napa Valley, Calif.—On the heels of the Napa Valley Vintners’ eighth trade mission to China, Wines & Vines talked with Marc Cohen, owner of 1,000-cases Howell at the Moon Winery, Angwin, about his successful penetration of the desirable Chinese market. It was, he said, a slow process.

You may remember that in 2006, Wines & Vines published a six-part series (“The Start-up Winery” by Jane Firstenfeld), detailing Cohen’s laborious creation of the winery. In late 2009, we documented its successful switch to selling direct to retailers in New York and New Jersey.

Cohen looked to China as a new market when the recession hit in 2008. He was fortunate to know a Chinese developer in San Francisco, who introduced him to friends in China interested in buying wine—particularly Napa Valley wine.

The “friends” turned out to be the 999 Corp., which owns hotels and restaurants in China, among other properties. In late 2008 they invited Cohen to visit the corporation’s headquarters in Shenzhen, a city of 20 million people not far from Hong Kong in southeast China.

Cohen paid his airfare, but was housed and fed by the company for a week. He took a case of wine and conducted wine tastings, but he found little knowledge about wine, so his visit became largely educational.

Big reds considered healthier
Cohen, who produces only Cabernet Sauvignon, said the people he met in China generally liked big, red wines. “They think it’s healthier,” which is important to them, he said, adding that his acquaintances were accustomed to Chinese wine, a penchant for which he did not share.

Cohen noted that the French, who entered the market decades ago, hold 70% of the market, but he said the Chinese like U.S. products. He added that big U.S. wine companies already have branches in China. “There’s a window to get in now. It’s the world’s biggest market in terms of dollars and people.”

After Cohen’s visit he didn’t hear anything for nine months, then he got an order for three cases. The buyers paid in advance for the wholesale cost and shipping, and they dealt with the 44% import tax.

Three months later they ordered 18 cases and invited Cohen for a return visit, and he did more education. Three months later, they ordered a pallet (54 cases).

In March 2010, Cohen returned again. This time, he was invited to a ceremony with the mayor, then the corporation ordered another pallet. “Howell at the Moon is the house wine of Shenzhen,” Cohen joked.

Last month Cohen returned to China with 40 other wineries representing Napa Valley Vintners, this time visiting Beijing and Shanghai in the northeast.

Cohen’s Cantonese distributor in Shenzhen wasn’t interested in expanding into that Mandarin region, but the distributor did attend the meetings, which proved to be a huge benefit to Cohen. He found this market far more sophisticated than Shenzhen was when he first visited.

The vintners spent three days each in the two important cities, attending lunches and dinners with importer/distributors, restaurants, retailers and consumers—generally, their best accounts and fans. Cohen said, “The Napa Valley Vintners did a great job. We met a lot of prospects, including 200 consumers. I made at least 100 contacts.”

Among them, Cohen met a number of promising distributors and has interviewed two back in California, although he hasn’t signed one yet.

All about networking
Cohen has learned that it takes a while to consummate business in China. “It’s all about networking and getting to know people so they have confidence in you.”

He said you have to go a few times without expectation of immediate returns. “You have to find a partner. In China, it’s not about how good your wine is or how it’s rated, but your relationships.”

He feels that everyone has a chance to build a brand in China, but warned: “Make sure they pay before you ship if you don’t have experience with them. Many importers make big claims, and many people have been stung.”

He adds, “China is like the wild west; there are no rules. Trust and friendship is vital.”

To make things a little easier, he’d like to see the U.S. negotiate a lower import tax. Currently, for example, Chilean wines are taxed only 18%.

Part of the Napa Valley Vintners’ trade mission was to deal with political issues including misuse of the Napa name in China and tariffs are certainly a concern.

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