While much has been made of China’s long-term potential as a consumption market for foreign wine producers, less attention has been given to China’s own domestic wine industry. The Ningxia wine region in northern China is at the forefront of the nation’s efforts to transform itself into a world-class wine superpower. Ningxia has transformed itself seemingly overnight into the epicentre of China’s modern wine industry and is now well positioned to capitalize on what some wine experts have called the “Golden Era” of wine in China.

Ningxia’s amazing 30-year growth trajectory

Grapes have only been grown in Ningxia since the early 1980s when domestic producers such as Changyu, Great Wall and Dynasty first began to appreciate the potential of the region. The first Ningxia winery opened in 1985. But even then, the majority of grapes grown in the vineyards surrounding the Helan Mountains were shipped to other regions within China for wine production. It was not until the late 1990s that vineyard development really began, and it was not until the mid-2000’s that foreign investors like Pernod Ricard and LVMH began to get interested in the region and small boutique wineries began to showcase their wines on the global stage.

The big breakthrough moment for Ningxia came in 2011 when the Helan Qingxue Winery won the highest award possible at the Decanter International Wine Awards for its red Bordeaux blend. In addition, Helan Qinqxue won a silver medal for its Chardonnay and a bronze for its Riesling. That breakthrough win was soon followed up by another triumph by Ningxia wineries. In the 2011 “Bordeaux vs. Ningxia” competition, 4 of the top 5 wines came from Ningxia, and only 1 from Bordeaux. For Chinese wine producers, that resounding victory was similar in impact to the 1976 “Judgment of Paris” that catapulted Napa Valley wines onto the world stage. It proved that Chinese producers could match their Bordeaux rivals’ step-for-step.

From 2011 to 2018, the story has been one of remarkable growth in the Ningxia wine region. The region now has a production base of 30,000 hectares, up from a minuscule 2,660 hectares in 2004. There are now almost 100 operational wineries in Ningxia. And Ningxia boutique wineries continue to win awards on the global stage. Moreover, given the rising wealth of Chinese consumers and their desire to travel abroad, award-winning Ningxia wines are now being embraced by luxury restaurants, top wine merchants and 5-star hotels around the world.

Moreover, that is really just a foreshadowing of what’s to come in the new Golden Era of wine. 80 more wineries in Ningxia are under construction, and 50 more are in the planning phase. Chinese producers, backed by the central Chinese government, say that there is a tremendous amount of land in the eastern foothills of the Helan Mountains – perhaps as much as 200,000 hectares – that can still be converted into vineyards. To put that number into context, that would give Ningxia access to a production area that is bigger than the entire wine production area of Australia or South Africa. If the full potential of that land could be tapped, it would immediately catapult Ningxia to the top ranks of the world’s wine regions.

Challenges ahead for Ningxia

However, that is a big “if.” There is still a lot of work to be done. The short-term vision for the region, for example, is to double the vineyard area and quadruple the wine production volume of the region by 2022. To make that possible, an area of land between the base of the Helan Mountains and the Yellow River has been reclassified as the Ningxia Experimental Area, and it is this area where it is possible to see China’s wine region of the future being built.

One big challenge for Ningxia, though, is how to boost production in a region that gets very cold in winter and where growing conditions are challenging at best. From November to March, for example, vines must be covered in earth and sand in order to protect them from the freezing temperatures. Vines are planted at a 35-degree angle to protect them from snowfall and icy precipitation. For that reason, the Chinese government has been very generous in making available funding for scientific research, as well as to maintain very strict supervision of the area. For example, when vines are brought in from France, they are carefully checked for viruses or other issues that could potentially damage the new vineyards being planted.

Another big challenge for Ningxia is how to move beyond the “copy Bordeaux” model of growth that has worked great until now. In terms of varietals planted, the focus is very much on the classic Bordeaux varietals, especially Cabernet Sauvignon. According to one estimate, 60% of all vines planted are now Cabernet Sauvignon. The hope in China is that the new small-scale boutique wineries being created will begin to plant other varietals and create a much more diversified production base.

In a best-case scenario, in fact, Ningxia will begin to look very much like Napa. In California, the path to success was to showcase the state’s world-class Cabernet Sauvignon and Chardonnay at first, and then to build on that momentum. Now, Napa Valley is the home to world-class versions of just about every wine varietal possible – a situation that China’s domestic producers are hopeful can happen in China as well.

And, finally, China’s domestic producers in Ningxia will have to deal with what is still a very young and not fully developed wine culture. While the history of winemaking in China extends back for centuries, there is still not a “modern” wine culture in China. For example, the traditional Western concept of pairing food and wine is still not mainstream in China. And, in China, the traditional drink for a night out is still the grain alcohol spirit baijiu and not wine. To overcome this challenge, more resources need to be dedicated to consumer wine education.

Opportunities ahead for Ningxia

The good news, however, is that Ningxia is uniquely positioned to benefit from the broader macro changes happening within the Chinese economy. For example, disposable income is up across the board, wine consumption is up across the board, and the middle class continues to grow. While the older generation of Chinese wine drinkers still gravitates to prestigious foreign wines, the newer millennial generation is much more open to experimentation. The hope is that prestigious, award-winning wines from Ningxia will capture their attention, much as the wines of Bordeaux and Burgundy captured the attention of the previous generation.

Another encouraging sign from the perspective of Ningxia producers is that “wine culture” is starting to spread from the first-tier cities (i.e. Beijing and Shanghai) and second-tier cities to the third- and fourth-tier cities located across China. This new customer demographic – young, middle-class consumers located in cities far from the coast – is a unique selling opportunity for Ningxia wine producers. This is what people are referring to when they use the term “Golden Era” of Chinese wine. Across the nation, there seems to be a growing appreciation for high-quality wines, and a willingness to embrace domestic Chinese wines.

The path forward to 2022

For Ningxia to deliver on its goals of doubling vineyard capacity and quadrupling wine production by 2022, there will need to be extensive support from the state, both in terms of financial resources and in terms of sponsoring research into wine production for the cold weather climate found in Ningxia.

If the amazing growth rate of the past 30 years can be anywhere close to duplicate, then there is a very strong likelihood that one day, wine lovers around the world may talk about Ningxia the same way they now talk about Bordeaux, Napa or Tuscany.