China 2030: Key Strategies for Fine Wine’s Most Complex Market

What if you had access to the world's leading minds of the fine wine world and beyond? What if you could pick their brains during three days of intensive workshops? What scenarios would they draft for tomorrow? What solution would they come up with to answer today's biggest challenges? Well welcome to the Aurene live sessions. I am your host, Paulin Dicare, Executive Director of Aurene Global and in this series, we share some of the most impactful conversations we had during Aurene live. I will buy annual events bringing together critical thinkers from iconic and forward-thinking fine wine producers to leading academics and business leaders. Come with us as we envision the future of our industry. Hi everyone and welcome to the third episode of the Reenilive sessions. Today's conversation is led by our editorial director, Exchaled in Air, Felicity Carter. She talks to Don Samper Jr., who has been a key figure in the Chinese wine market since the beginning. With his father, Don co-founded ASC Fine Wines in 1996, a company that almost single-handedly built the premium wine market in China. He sold ASC to Centauri in 2009, walked away a few years later, and was widely assumed to be gone for good. But in April of this year, he and his wife, Monica Shousenpier, stunned the industry by buying ASC back. The move has been lagging to a Steve Jobs-style return, not because Don is selling gadgets, but because he's betting, it can reinvent how wine is sold and consumed in the world's most complex wine market. In this white-ranging conversation, he explained why he went back to China, was changed and how producers should think about the next phase. Felicity, over to you. So it's a huge pleasure to be here talking to Don, who I think our first interview'd maybe 15 years ago. So the significance of Don Samper Jr., he's Don Samper Jr., his father, Don Samper, and he went to China in 1996 before the wine market had developed. And they almost single-handedly developed the wine market in China, particularly for fine wine. So I thought it would be really interesting to hear a bit about how China has changed in that time. And the why of why he went up in China and something about the journey. Thank you Felicity. So our story is a family story. And China plays a very important role. My father first went to Beijing in 1985. And at that time, the idea of foreigners operating in China was really about joint ventures and foreign direct investment. And my father brought Beijing Jeep to China, which was the first American automobile joint venture. Actually, he didn't bring it to China, but he was the first CEO. And that was a very interesting time. In 1985, it was the beginning of foreign direct investment in China. And the automobile industry was in its infancy. So very interesting to think about what China is today with respect to the automobile industry. I think most of you have read about the incredible advancements in the EV technology. And China is now the leading producer of EVs in the world. I think Elon Musk said of the top 10 EV producers. There's Tesla, and there's nine other Chinese companies. So who would have thought, in 1985, that China would become that? So fast forward to 1996. My dad and I, and I grew up a only child, best friends with my father, always wanted to work together. And he wanted to leave the corporate world. I had started a few businesses by then. I had some success, not in the wine industry. And he and I decided to start a business together, importing something and selling it to China. So we saw in 1996 as kind of the second phase of China's development, where local consumers in China would take an interest to start buying things that were imported, that the wealth creation was just beginning. And as opposed to making things and shipping them out of China, we wanted to import things to China. We didn't know anything about the wine industry. We enjoyed drinking wine. Actually, my dad enjoyed drinking scotch more than wine. But we knew a few people in the wine industry. And so we started asking around. And we decided, let's give this a try. So we rounded up a few families with brands that were willing to sell to us in China. And in April of 1996, we started to import wine to China. And I think at that stage, as Felicity mentioned, really the wine consumption curve was just beginning. I think the most interesting part of 1996 was that domestic production and the government's interest in planting vineyards, this had been going on for about six, seven years already. And this was creating the basis for interest in wine. And that's the second story in our journey, the second phase. And if we fast forward to today, I guess you could call this a third phase. And we'll talk more about why we're optimistic and why the markets change so much. So what was the Chinese government's interest in wine? Why did it suddenly start planting vines up in an northwest? I think, as I understand it, the Chinese government was looking at wine as an alternative to baijou, a healthy alternative to baijou. And there were a couple of challenges that the Chinese government saw in baijou being the national drink. I might say it still is the national drink. But one issue was that government officials were getting too drunk. That efficiency was just not where the senior level government officials thought it should be. The second issue was related to resources. The raw materials used to make baijou really needed to be used to make food. And the idea of feeding the people in China was really the priority. So I think those two factors were part of it. And I think maybe somewhere in the background, there was the idea that wine as a product was something that Chinese culture aligned around that there's an interest in wine. And what was the Chinese wine economy like then? And how did it develop? I mean, for example, who was buying wine and why would they buy it? In 1995, '99, '60, the only buyers of wine were five-star hotels in a few cities. That was pretty much about it. And the only way hotels could acquire wine was through Hong Kong-based importers. So hotels would have to ship maybe 50, 60 cases in at a time. And of course, in hotels, the only people consuming wine were foreigners. So it was really a market largely defined by the foreign hotel operators and the foreigners that were coming into China. I remember the first vent that we had for our clients, which were a combination of foreign food and beverage directors and some foreigners, plus some local Chinese state-owned enterprise people that were interested in wine. We held it at a golf course. I think it was in June of 1996. And none of the people that were serving the wine knew how to open a bottle of wine. So the education of wine consumption started literally for us with teaching people how to open, how to use a corkscrew and open bottles of wine. So it became part of the gifting economy. Yeah, the big shift for wine was when wine was seen as something of real value, to be given as a gift or to be used as entertainment, to further your business interests or further your relationships. And that, I think, really defined the wine industry in the first phase of its development was that wine, and particularly fine wine, and particularly Bordeaux, was seen as a valuable tool that could be used to build your relationship. That's so much of the volume of fine wine consumption and just wine in general was used in entertainment and gifting. So I remember there was this enormous enthusiasm around the Chinese market, especially around 2008-2009. People were shipping absolutely huge amounts of wine to China. And then it went off a cliff. What happened? Well, I mean, 2008, global financial crisis. We all remember that. And China was really the only country that really stood up and really stimulated the economy. And a lot of people think that it was a big part of the global recovery is demand in China. And part of that demand was demand for wine. I think important to note in 2009 was an inflection point in how China saw the West. I think up until then, the Beijing government saw American particular as a model to emulate. And in 2009, they realized that there were major problems with the American model. And that started a shift in the attitudes of the Chinese government where they started to feel that they needed to figure this out more on their own. And really created the beginnings of a change in how the Chinese saw their role, the growth of their own economy. Going off a cliff, I think. I think 2011 was when Xi Jinping came into power. And one of the first things he did was a major crackdown on corruption, 2011, 2012. And part of that was gifting. And so you saw a massive decline in the use of wine as gifting. And I think that was the primary reason why we started to see shibans decline. There was some idea that wine was also a good investment. And that kind of quickly went away as well. So the idea of buying futures in Bordeaux was something that was quite popular in 2009, 2010. And that just stopped. - And buying real estate too. I remember Bordeaux coming to the Hong Kong wine fair to pitch sales of shuttows to Chinese buyers as well. All right, so what has changed since then? And what took you back to China? And what makes you think that wine is a good investment in China? - Well, we left China. I sold 80% of ASC to Suntory in 2010. In 2013, I sold the remaining amount. And we moved Monica somewhere here in the background. Monica and I with our three daughters moved to the United States. And that began a different type of journey for us in a different area of the wine industry. So 10 years later, we knew it was time to leave. We were living in San Francisco. And so we decided to move back to China. We thought, you know, the idea of being greedy when people were afraid and being a bit afraid when people are greedy, you know, that idea really resonates with us. And we thought everybody was really afraid of China. And we felt it was a very good time to go back. And perhaps we talk some reasons why. But we felt, despite the fact that the economy was really struggling, that everybody was fleeing China, we felt quite confident in the Chinese people to put it simply. I mean, there's always been foreigners that have looked at China and said, "They're never going to be able to deal with this challenge." And the Chinese people have always found a way to deal with challenges through hard work, perseverance, intelligence. And so we felt in the background, despite all of these challenges, that China was going to figure it out. And that combination of the government being smarter about how they implemented policy, entrepreneurs regaining their confidence, and China changing the nature of its economy to take advantage of the way the world is going. We're all factors behind our interest to return to China. We felt China was at the bottom of its transition to a new type of economy, and things were going to get better over the next four or five years. OK, let's get more specific about this. So you've described China's wine market as going through a fundamental reset. So what are the opportunities that this reset opens up? And specifically for fine wine producers. I think, as I mentioned earlier, wine really was a tool to be used to build relationships in the past. And that's now all changed. And the people that are purchasing wine today are purchasing it mostly for their own personal enjoyment and interest. And this is defining wine we believe for the future. I'm not saying that the gifting culture won't come back. I think it's inherent in Chinese culture that alcohol plays a big role in building relationships. And I think as business confidence comes back, we'll start to see a return of gifting and entertainment. But what has happened now, thanks to this big decline in-- well, thanks to zero COVID, thanks to many things-- that the consumer, the real consumers, emerged. And they're interested in things like white wine. So people looked at Chinese consumption before and couldn't figure out why was 95% of wine imported to China red. This doesn't make any sense. Well, that's what was used as gifting. So now we're seeing a big shift towards what people really are interested in drinking. And I think fundamentally, that's where the future opportunities is coming from. Now, if you combine that with the incredible social media platforms that will enable storytelling, that do enable storytelling, with the logistics at e-commerce expertise and infrastructure of China, that combination for us is the most interesting path towards the future for fine wine for commercial wine. So let's talk a bit about logistics. Because over breakfast, you were telling me about how artisanal food and all sorts of things have grown because of China's incredible logistics. Can you explain how this all works? Well, one of the big changes that we've recognized, since we've moved back to China, is the quality and diversity of food available in a city like Shanghai is so much better than what it was when we lived there. So what you're seeing is agricultural producers, artisanal producers of food, being able to deliver their products anywhere in China very quickly because of the logistics infrastructure that is developed. So a grower of mushrooms in Yunnan province can have those mushrooms delivered to me a consumer in 48 hours from when I ordered it, or 24 hours. So what's happening is restaurants are taking advantage of this and the quality of what's being presented is so much better than what it was before. Can I ask how you get something across country in 24 hours? Just the infrastructure that China has built is unbelievable. I mean, if you can think about a lot of the criticism that China came under over the last 20 years is overbuilding its infrastructure. Too many rows that led to nowhere, too many airports that weren't being serviced. Well, all of that's being used now. So they were in front of where they saw the economy going. One of the challenges that economies like Vietnam, Cambodia, Mexico face today is they haven't built the infrastructure to deal with future demand, China built that infrastructure and they're able to leverage that now. And that's that underpinning of infrastructure allows this tremendous efficiency of delivering product from point A to point B at a very, very low cost. All right. So you're not talking about magic drone technology or something. We're talking normal logistics just very well done. Magic drone technology is coming. It'll be in China before anywhere else. But no, it's planes, it's trucks, it's scooters. It's having a huge amount of human resources with which to get the product from point A to point B. Hello, sinners. Two very quick things before we go back to our conversation. This podcast series is part of a larger, reneglobal research project. And we have a whole series of articles and publications in the bad plan. So don't forget to subscribe to our newsletter at reneglobal to be the first to read them. I'll put all the links in the show notes. And if you like what you've heard so far, please do subscribe to the Eurene Podcast channel on any other platforms that you are listening to this episode done and give us a good rating. It really helps. The more subscriber we have, the more resources we have to continue our exploration. We're back to the episode now. OK. So the next thing that everyone wants to know about is the e-commerce of China, which is quite unlike the West, I believe, and far more advanced. Can you talk about that? Well, just the nature of how Chinese consumers interact with the digital world is very advanced, relative to most places. And so people just buy everything pretty much online. And the delivery is instantaneous almost. So the e-commerce backbone of China is very advanced. I would say the challenge that e-commerce has posed for many premium products is that it's very price competitive. So unless you've done a good job of segmenting how your product is sold and who you're selling your product to, you'll often find yourself in a situation where the product that you manufacture is being sold at a price where no one makes any money except for the platforms, which are Alibaba, which is Timo primarily, and Jin Dong. So you have to develop a strategy that allows the product that you're manufacturing to be sold at a price where people can make money. I think we said yesterday in one of the panels about the importance that every partner in the chain makes a little bit of money. That's not always the case in China. And it's very important that as a producer or an importer, you develop a strategy where you maintain price integrity and in the brand. is being communicated in a way where it's profitable for you and your distribution partner. Can you give me an example? So let's just say I happen to have a fine wine brand. I want to go into China and I've been told that I need to do digital storytelling to reach Chinese consumers. What do I do? I mean, how does this actually manifest? Yeah. Well, you would probably first work with AAC. Just joking. I think there's many examples. I mean, Laura Katena, who I think's in the room somewhere, has done a good job of building a presence online with different partners in China that understand her story and tell it in a way that can resonate with the Chinese consumer. So I think what's most important is you find a partner that's able to tell your story in a way that resonates with the target audience that you're speaking to. And one of the great things about wine is all the great stories there are to tell from the producers and the families. But which part of that story do you tell is very important. And because how which part of your story is going to resonate with the Chinese consumer could be very different than which part of the story is going to resonate with the American consumer. So I just want to go back to the macro economic outlook. So we know that the reporting of what we see is not really representative of what's actually happening in China. But the reporting that we do see is about an economy that's in a slump at the moment where young people are finding it difficult to get jobs, the real estate market is really wrecked investment and so on. But you believe in the Chinese economy. So what is it that the rest of us are not seeing? Well, I think we use real estate as an example. I think Beijing realized that far too much of the economic well being of the country was tied up to the people's perception of the value of their own real estate holdings. And their confidence in the future was dependent upon those real estate holdings continuing to go up. And that was not a sustainable way for the for Beijing to see the economy to develop. And so they really had to clamp down on real estate speculation. Otherwise, it was going to get much much worse. So they did it in a very heavy handed way where they just pulled support from a lot of private developers and a lot of these developers just went bankrupt. And this just created a really difficult situation very quickly for the value of people's real estate holdings. So I think this is a good example because the macro strategy here was correct, but the micro implementation was was was too heavy handed. So this is often the case where the idea of what the Chinese government wants to do makes total sense, but the overreach or way that things are implemented went too far. So my feeling is that China is at the bottom of the policy mistakes and is now starting to come out of that. And there's a saying in China, which is called Chuan Jinguo. My, anyways, my Chinese sucks. It's going to get better. So, so, so, Tian Jinguo means basically it's the nickname for Donald Trump and China. And what it literally translates is make China great again. And, and the reason why so many China's believe that is because Trump is pushing China towards making domestic consumption a bigger part of GDP. And, and most entrepreneurs, most people believe that's what should have. And most economists believe that the percentage of domestic consumption has fallen too low. Clearly savings rates have gone up way too high. In the last five years, savings rates have increased by $12 trillion. That's double the size of the Japanese GDP in the last five years. So what that tells you is people don't have confidence to spend the money. But the money's there. So, a final question. What is your new model to unlock all of this money out of people's savings accounts? So, you know, we see three things. First, we have to eliminate the bureaucracy. There was ASC, you know, a centauri who I greatly admire. But it's a very large bureaucratic Japanese company. So we are really focusing on changing the culture of how decisions are made, the speed of which decisions are made, making a much more entrepreneurial. Second, we're focusing on third party logistics. We've partnered with what who we believe to be the best coal chain logistics company in China. 33 warehouses throughout the country. Incredible ability to fulfill both at an e-commerce level and at a trade level to retailers and hotels throughout the country. So we've got one partner, best in class, to deal with all of our logistics. This is going to allow us to scale the business and service customers in a way that we just weren't before. Our third party is direct to consumer. We're going to focus heavily and my partner in life Monica is here is leading this charge. We're going to focus heavily on e-commerce tied to social media, working with our partners to tell the stories, but not only tell the stories, ensure that they're told in a way where when consumers want to buy, they can buy the product immediately. Those are the three broad things that we're doing to change. Underpinning all that, ASC is still the best importer in China defined by value, number of customers of any other importer. So there's still servicing hotels, restaurants, retailers very well. We just got to get better at doing that. Get some of that $12 trillion. Right, do we have time for questions? Anybody got any questions? Hey listeners, me again. So this conversation was recorded in July 2025 live from Domain Calinfran Burgundy. Our microphones unfortunately didn't pick all the great questions. Our audience asked on that day, the volume wasn't loud enough for us to use it. So I re-recorded them all the questions and we'll be asking them on their behalf. And the first one we had was done what's about Chinese wine and the Chinese wine industry? Here is Don's answer. Yeah, I think the Chinese wine industry unsurprisingly is going through a massive change right now. The issue of gifting that I mentioned before, most of the Chinese wine industry was built around gifting entertainment, particularly with their local governments and regions where their businesses were located. And a lot of that business has gone away. And most of these large Chinese wineries were state owned or state invested. And now what we're seeing is the emergence of entrepreneurs planting vineyards, focusing on the terroir and focusing on making good wine, add more reasonable prices, and not building out huge chateaus, huge bottling facilities, that sort of thing. So I think we're seeing the emergence of a new class of Chinese wine makers. And this is very exciting. Moody who's in the room is part of that movement. And we're going to see more and more and more of that. And I think that's really going to help everything we do in wine because the challenge for Chinese wine before was that the quality honestly wasn't that good and the price was really ridiculously high. So that I think I'm very optimistic. ASE represents three different Chinese wine producers, all of which make very good wine. Do you think the level of Chinese wine consumption, whatever returned, what it was in its glorious years? Most definitely. Yeah, most definitely. You know, I think if you look at just the economic trajectory and growth where the economy is going, it's going to create a lot more wealth in the future. And a lot of people are going to have a lot more money in their pocket. They're going to be a lot more optimistic and they're going to spend money. So I'm very confident of that. I would say five years to get back to maybe the height, but the nature of consumption will be much more healthy and much better than what it was in the previous version of that. Don, you mentioned the importance of telling a story that resonated with the Chinese culture whilst also mentioning that Chinese culture has a strong preference for Bai Zhu. I wonder if part of your plan include gradually educating the younger generation to shift from drinking Bai Zhu and orientate them towards the more healthy wine alternative. Will that be part of your emphasis in your marketing story? Yeah, I mean, I think if we can crack that shift, if we can crack that, then that's really opening up a massive opportunity. I think just to put it into context, Bai Zhu is up until maybe three months ago. It's probably 20% down, but is on a yearly basis over 300 billion US dollars in revenue a year through Bai Zhu. And maybe that's down to maybe 260 billion. The number one Bai Zhu company, which is called multi had a market cap last year, three times the size of Diageo. The number two was double the size of Diageo. I mean, these are massive, massive companies with massive demand. man. So I think we're not going to be able to get the older, more mature, bio drinkers to drink wine for their own pleasure. But I think there's a great opportunity where wine plays a bigger role in future alcohol consumption for the younger generation. And that's a big part of our level of optimism. How we do that has to be about storytelling, about efficiency of distribution, logistics, getting the product to the consumer quickly at a reasonable price. Could you share a little bit your ideas for Hong Hong Kong Macau and that part of the world? Yeah, I mean, we have 20 people that work for us in in Hong Kong that cover Macau through Hong Kong. Hong Kong has in many ways gone through a much bigger challenge than China has since the started with the protests and then COVID. And I think Hong Kong is still trying to define what it's going to be when it grows up. Beijing is very supportive of Hong Kong. And I think there's a lot of reasons to be optimistic about Hong Kong's role, continuing role as it relates to being a partner for China. I think understanding what that role is going to be is evolving still and it's not clear. But China needs Hong Kong. Hong Kong certainly needs China. And I think they're going to find a way to make Hong Kong relevant in the future. Right now, it's still struggling. How does the government try to regulate distribution, consumption of wine and other alcoholic products? Is it done centrally or are there regional differences? One of the reasons we're optimistic, Eric, about China is there's a relatively lack little regulation. So there's no free-tier system in China. Theoretically, a producer like Laura could set up a trading company and sell directly to end consumers. So I think from a regulatory standpoint, China's quite open. Now, there are elements of how they do regulate, which could be very difficult like the back label requirements and what you can and cannot put on a back label. We had this instance recently where we were trying to put more information on the back label about the story of the winery. And some competitors claim that some of the story was false. So we got sued and we had to take the back labels off and put new back labels on. So there's great area. There's a lot of gray area existing and bad actors can attack you through those gray areas and leverage their ability to navigate the system in some ways better than you can. Done, 15 years is quite a long hiatus. China has changed, ASE has changed, the market has changed. What advice do you have for producers? Do we need to supply the same product we did 15 years ago, or should we be innovating? I think the first advice is you got to go back and see what it's like these days. And I think how a raise of hands, how many people have that have business interests in China would have visited China in the last 12 months? Okay, so we have some. How many have business interests in China, but there's not visited China in the last 12 months? Okay, so I got to get there, check it out. It's just the vibe is so much different. And I think that will, my feeling is that gives you some optimism. I think speaking to Laura last night, she has a level of optimism because she's visited China. And I think that's important. But then from there, what do you do? I think this is a little bit in detail, but channel segmentation. You have to be very careful about how your products are sold in which channels. If your partner is selling the same product in multiple channels, you have a problem because certain channels will price compete, bring your price down, other channels won't want to sell it. And before you know it, you'll be in a situation where you're pricing, no one's making money. And the brand, the perceived value of the brand has declined. So I think then your channel segmentation might dictate how you then choose to offer different products. So if you want to be competitive in Costco, but you also want to sell in e-commerce, you definitely need to have two different products to sell in those two different channels. Many wine makers have encountered problems when it came to protecting their brands with people that had nothing to do with them trying to register the trademark in China. What are the best ways to protect one's brand in China? I think based on my experience, you've got bad actors that try and take advantage of the fact that you haven't registered your trademark. If you haven't registered your trademark, you should do so. If it's already registered, you should be able to get it back because you're the authentic owner of that trademark. And I think the Chinese court systems have really advanced and they're on your side now. They're not on the side of the fraudster. So I feel like it's a much more black and white environment and it's much easier to correct any problems that have occurred through fraud or criminal activity than what it had been 10 years ago. Don, many brands have invested in the on trade for the past few years, but recently have some new huge drops in sales and the channel seems to have shrunk. What is your perspective on that? And what is the role on the on trade channel moving forward? Yeah, if you look at ASC's channel mix right now, I think on trade is about 35, 40% of revenue used to be maybe 70%. So it's come down. I mean, we're going, I'm going into on trade accounts all the time now in China and it's very hard because people are just not spending money. They're not spending money in the way they used to. And as you mentioned, a lot of people are bringing their own bottles. And I think that's a trend that's going to continue. So I see opportunities in the on trade, but in it's in a different way. For example, I think there's opportunities for on-premise accounts to have sort of little wine shops in their restaurants and making it much less formal with a traditional wine list that you have to reprint every time you change your list. So I think there needs to be more flexibility. There needs to be better pricing, which if you can work out with your suppliers where you're not carrying the inventory or a lot of the inventory, they are and leverage the Chinese logistics infrastructure. I think that's quite interesting. I think technology is going to play a very important role in the on-trade recovery because the bottom line is people still love to go out and entertain and drink wine. A proof of that is COVID. When you think about what happened in China during COVID, wine sales went down dramatically. People didn't drink wine at their home. That happened in the United States. Wine sales went up dramatically or up a lot because people drank wine at home instead of going out. So in China, that shows you still wine consumption on trade can be important, but how people are buying it and how the on-trade deals with how they're selling it needs to change. In Hong Kong, people have wine collections, so they do bring the wine from those collections. The difference is people in Beijing, they don't have wine collections, but they just buy it from somewhere and bring it to the restaurant. There's a big trend where actually you go sit down in a restaurant and you open up Maytuan, which is one of the apps that deliver products, and you just order your bottle of Maytuan and it gets delivered to the restaurant in 20 minutes. The restaurant legally cannot charge a mortgage. You can charge a glass washing fee. That's what some restaurants do, but it's hard.