The PACIFIC : ASIA GETS TASTE FOR CALIFORNIA WINE : Exports Surge as U.S. Dollar Drops in Value

When a group of Americans working in Japan gathered to share their interest in wine, they decided that they should raise the awareness of U.S. wines--95% of which come from California.

So they began forming a group and called upon some influential Japanese, including one of Japan’s former ambassadors to the United States, a senior executive of Mitsubishi Motors Corp., the editor of Japan’s leading wine magazine and a world-famous sumo wrestler.

“We felt there was an important need to create prestige,” explains James B. Vaughn, director of California’s Office of Trade and Investment. He and James A. Merchant, director of Fluor Daniel Inc. in Japan, organized the first chapter in Asia of the Brotherhood of the Knights of the Vine, which celebrates an appreciation for wine with 17th-Century pageantry.

Such efforts are expected to help increase awareness and, more importantly, the volume of U.S. wine exports to Japan. While French wines sell best among imports in Japan, American wines have become No. 2.

Meanwhile back in the United States, the Asian influence is making its way to Northern California. Two Japanese companies have recently purchased California wineries. Sapporo Breweries paid $3 million to acquire St. Clement in the Napa Valley, and the 100-year-old Ridge Vineyard in the Santa Cruz Mountains is now owned by Otsuka Pharmaceuticals Ltd.

Shipments of U.S. wines worldwide are up dramatically--66.6% in the first 11 months of 1987 from the year before--with exports to Japan and Taiwan, in particular, showing even bigger increases.

Volume Remains Small

Thanks in part to the drop of the dollar, which makes U.S. wine prices more competitive, California wines are popping up on tables at hotels and restaurants in Asia. Robert Mondavi wines, for example, can be found in Japan. The Riverside Plaza Hotel in Hong Kong serves wines from Buena Vista Winery in Sonoma. The Hilton Hotel in Taiwan offers red wines from Sebastiani Vineyards, also in Sonoma.

Despite hefty percentage increases, the actual volume of U.S. wine shipments overseas remains small, the equivalent of about 2.7% of California’s total domestic wine shipments, according to Jon A. Fredrikson of the San Francisco wine consulting firm of Gomberg, Fredrikson Associates. “That is still small in relation to the total industry.”

But wine industry observers are quick to point out that the new-found accessibility to Japan and Taiwan presents new market opportunities. Vaughn of the California trade office says that American wines account for 16% of all wines imported into Japan, up from 4% to 5% five years ago. “Wine consumption in Japan is still an infant market,” he says.

A survey of the Japanese table wine market in 1986 by Nippon Research Center showed that 40% of Japanese 18 years old or older drank wine and that 24% of the wine drinkers preferred white wines and 11% preferred red. Sweet wines (52%) were preferred over dry ones (20%). The study also indicated that they drink domestic wines at home, but more than half selected foreign wines when dining out.

In contrast, wine drinkers in Taiwan, according to California wine makers, prefer red wines. Exports to Taiwan were very small in 1986, but the country became the fourth-largest importer of U.S. wines a year later.

More Wineries Involved

“Where it is important is to the smaller wineries,” Fredrikson says of exports. “It is extra business that they never had before. That’s why if they get a couple of export orders it helps out. It seems to be spread across the board among dozens and dozens of wineries.”

The Wine Institute in San Francisco reports that about 125 California wineries do business in Japan, up from 30, two years ago. A dozen more California wineries do business in Taiwan.

“We experienced a huge increase in exports to all over the world, particularly to Japan,” says Peter Kasper, vice president and controller of Buena Vista Winery, which also moved into Taiwan, South Korea and the Philippines for the first time last year. The winery’s exports to Asia totaled 25,000 cases in the past six months, up 2,000% from the year before.

Kasper credits part of Buena Vista’s success in Japan to switching to Sapporo Beer Co. as distributor six months ago. “A distributor makes a big difference,” Kasper says.

Robert Mondavi visited Hong Kong, Singapore and Shanghai late last year. Said a spokesman for the winery: “We’ve seen good increases around the world. We’ve started an export program and established an office in London for Europe and plan to add a person for the Pacific Rim. That is sort of putting our money into building a true export market.”

For now, the two Japanese companies that acquired California wineries appear more interested in learning the skill of wine making than in exporting huge amounts of U.S. wine back to Japan.

Firm Avoids Taiwan

A. Otsuka, president of the Japanese pharmaceutical firm that owns Ridge, has a small, 3,000-case experimental winery, making white wine at the base of Mount Fuji. Since Ridge, which specializes in red wines, changed ownership on Dec. 30, Takahiro Oguri has arrived in Northern California to become an apprentice to Paul Draper, Ridge’s wine maker. Otherwise, little has changed in Ridge’s Japan selling strategy.

“We have increased our sales to Japan, but not by a huge amount,” says Don Reisen, director of marketing and sales. Ridge has avoided Taiwan entirely because as Reisen puts it, “way too much wine went into Taiwan.”

Sapporo Breweries purchased St. Clement to add a premium grade wine to its current test market of a wine it produces in Japan. Sadahiro Higashiyama, St. Clement’s general manager dispatched from Japan, says a small selection of St. Clement’s fine wines was sent to Japan.

But he believes that the winery’s primary focus is still domestic. “We feel the main direction of St. Clement continues to be the American market,” Higashiyama said.

U.S. WINE EXPORTS Total to top five importing countries, in thousands of liters, for January-November.

1987 1986 Pct. change Canada 11,507 9,770 17.8 Japan 7,890 4,670 68.9 United Kingdom 6,854 3,307 107.3 Taiwan 2,253 108 1,986.0 Belgium/Luxembourg 1,246 790 57.7 TOTAL WORLDWIDE 41,382 24,832 66.6

Total to top five importing countries, in thousands of dollars, for January-November.

1987 1986 Pct. change Canada $10,141 $6,517 55.6 Japan 12,937 6,525 98.3 United Kingdom 9,911 4,583 116.2 Taiwan 3,466 214 1,519.6 Belgium/Luxembourg 1,817 1,229 47.8 TOTAL WORLDWIDE 55,781 31,358 77.9

Source: U.S. Department of Agriculture