Taiwan Today

The word is out: wine is good for you. And as some local shippers have discovered, the rapidly growing demand for imports from the world’s best vineyards can boost the balance sheet too.

Some people believe we are what we eat. But for the shrewd stu­dent of human nature, a more revealing indicator may be what we drink—and on this basis, Taiwan is becoming a very cosmopolitan sort of place. It was not always so. A decade ago, a typical celebration might involve going to a neighborhood restaurant, ordering up a slew of local dishes, and then washing them down with large quanti­ties of good old-fashioned booze: imported cognac and whiskey for those who could afford them; their grain­-based Chinese variants, Shaohsing and Kaoliang, for those who could not; and copious amounts of beer for absolutely everybody.

Things are changing. Nowadays, more and more people are taking the thoughtful approach to dining. They pre­fer to swirl fine imported wine around the glass while savoring dishes from all over the world—just another example of Tai­wan’s growing internationalization. For many of the new gourmets, names like Chardonnay, Cabernet Sauvignon, and Sauvignon Blanc have quietly become part of their daily drinking vocabulary, despite the fact that they may still have difficulty pronouncing the French words.

So here’s to wine—but first, let’s drink a toast to the end of martial law. When the regulations were repealed in 1987 after four decades of restriction on all aspects of life, the import of alcohol was one of the first things to be freed up. The ban on foreign wine was lifted first, in 1987, and spirits were liberated in 1992. Mary Soh (束煥新) manages the wine department of Remy Eastward Fine Wines and Spirits, a major liquor importer. “Before 1987,” she says, “all liquor imports were controlled by the Taiwan Tobacco and Wine Monopoly Bureau (TTWMB). When the ban was lifted, any­body could import anything, and suddenly there were all these kinds of different prod­ucts flooding the market.” But for most people at that time, wine was still unknown territory. Red wine’s image, for example, was shaped by the product of that name produced by the TTWMB, which was (and still is) manufactured with added sugar. Imported spirits such as brandy and whis­key, on the other hand, although still under TTWMB control, quickly became popular upscale products.

Soh remembers trying to introduce French wine to the local market in the early days. “We would set up a promotion booth in some supermarket and ask shoppers to taste our wine,” she says. “A typical reac­tion was: ‘Yuck! This tastes awful. Why is it so sour?’’’ Remy Eastward’s salespersons then had to explain that this wine had been naturally produced, that it did not contain additives or artificial coloring, and that this was the way it was supposed to taste.

Wine sales did not start to take off until about three years ago, according to William C. Hsu Jr. (須家昌), sales manager of Sergio Valente Inc., an­other big wine ship­per. “Since then we’ve seen almost 10 percent growth a year,” he says. Ac­cording to a report prepared by Remy Eastward, Taiwan’s annual wine con­sumption increased from 2 to 3 million liters between 1992 and 1995. In the first four months of this year, sales of imported wine amounted to 1.4 million liters, ap­proximately half of last year’s total consumption. De­spite an economic slowdown, Mary Soh predicts that in 1996 Remy East­ward will see its im­ported wine sales grow by even more than last year’s annual increase of 30 percent.

What has brought this about? One factor is undoubtedly a rise in the number of supermarkets offering imported food and drink, such as Park & Shop, and Wellcome. Then again, over the last four years or so, many more restaurants and hotels have begun to offer their clientele a Western culinary culture in which wine plays a major role.

It also has to be remembered that when New York or San Francisco sneezes, Taiwan frequently catches cold. William Hsu has been observing the local market for some years. “Wine drinking has a really long history in Europe,” he says. “There, it’s as common a drink as beer. But Americans only really started making wine part of their lives about six years ago. In Taiwan, it was three years ago. Wine has become a lot more popular recently in Japan, Hong Kong, and Sin­gapore, too.”

Is there any­thing more to all this than a vague desire to keep up with global trends? A raised level of health awareness, partly inspired by what people made of a Harvard medical report which came out several years ago, probably has a role to play. “The Harvard report says that the French are least likely to suffer from heart attacks, high blood pressure, or high cho­lesterol problems,” Hsu notes. “The report attributed that to the tannin in red wine, which can help reduce blood cholesterol.” The report had a worldwide impact, and Taiwan duly took note. One of the more striking manifestations of that occurred when a group of doctors at one of Taipei’s foremost hospitals learned that drinking wine might be good for health: they approached Hsu and asked him to organ­ize a wine appreciation class for them. “They confirmed the report’s findings tome,” he says.

This is one reflection of a general desire for a higher standard of living, in Taiwan as elsewhere. “When people become affluent, they want better health,” Hsu maintains. “A lot of people are quit­ting smoking, for example. They’re start­ing to be more concerned about protecting the environment, too. And now they’re also starting to look at wine as a health drink.” Hsu sees this change of attitude as a symbol of genuinely increased wealth. “In the old days,” he recalls, “if you wanted people to know you were loaded, you bought gold and fancy cars and you swigged expensive liquor as if it was wa­ter. Taiwan is slowly getting over all that.”

William Hsu of Sergio Valente does not think that the increasing demand for wine is as closely related to growing affluence as many people would like to think. But he is aware of a tendency among consumers to choose products not on the basis of their innate quality but on price, believing that the more they have to pay the better the wine will be. This mindset dates back to the time when people first began to have money to spend on luxuries, thanks to the much-acclaimed “economic miracle.” Just recently a wine connoisseur admitted in a television interview that it would be “em­barrassing” to serve wine priced at less than NT$4,000 [US$145] a bottle at a for­mal party.

“People have a lot of buying power,” notes Mary Soh of Remy Eastward. “The old-style typical attitude was: Tell me which bottle is the most expensive and I’ll buy it. As you know, a bottle of cognac costs at least US$70, yet for years now people here have been gulping down the stuff like mad.”

Consumers followed a similar pattern when society first picked up the wine habit a few years ago. Nowadays Soh still encounters customers with that kind of nouveau riche mentality from time to time. “You’re always going to have that type of customer, no matter what you’re selling,” she says.“But the ‘old money’ people understand that some perfectly good wine can cost just US$20.”

It would be a mistake to think that the market consists only of people who can afford high-priced wines. Many buyers are very discriminating. To satisfy customers at the top of the buying pyramid, import­ers are obliged to chase wines of superior quality, regardless of price. That, accord­ing to Hsu of Sergio Valente, is the biggest difference between Taiwan wine shippers and importers from other countries, when it comes to selecting products geared to their respective markets. “There are lots of people in Taiwan who want only premier­ grade wine from the best vineyards in the world,” Hsu says. “But a particular vine­yard only produces a limited amount of first-class wine each year. There just isn’t enough to meet local demand.”

The result is that many top-quality wines have come to be regarded as invest­ments, albeit rather speculative ones. Remy Eastward’s Mary Soh says the price of a sought-after Grand Cru Classe might change as much as three times in twelve months. “Last year, some wines were fetching only NT$5,000 [US$180] a bot­tle,” she says. “This year those same wines cost NT$15,000 [US$540] and the price is still rising.” And speculation in wine wor­ries those who would like to see Taiwan develop a strong, long-term wine market. “We don’t want to sell only the best,” Hsu says. “Of course, if customers ordered only high-priced products, it would make im­porters happy in the short term. But that’s not a healthy way to generate business. Such a market goes down fast; we’ve already seen it happen with brandy.”

Two years ago, brandy was the hottest item on the liquor market. Then a local newspaper published a report which said that brandy equals calories. Sales began to fall, and whiskey took over as market leader. Now the rising star is wine. Mary Soh points out that in the past, wine accounted for only 18 percent of the imported alcohol market, whereas today’s figure is almost 44 percent. (The rest is shared by beer and spirits.)

Hsu, however, still feels cautious. He points to Taiwan’s essentially short-term business philosophy, particularly in the service industry sector. “If you look at business trends in Taiwan,” he says, “you find that once something starts to pick up, it will become very strong but then fade quickly. Very few products are able to stay the course.” He illustrates his point by reference to the MTV business, which ultimately developed into today’s karaoke phenomenon.

The Taiwan MTV phenomenon was the result of a simple idea that worked like this. The customer selected a movie from a wide range in stock and then viewed it in a private room to which staff would bring refreshments. A private cinema, in other words. When it hit the market back in the late eighties, it almost immediately became a craze. Before long the supply of MTVs outstripped demand, because so many people regarded it as a profitable business to get into. Today, only very few of them survive. “That’s where the wine business stands, right now,” Hsu says. “It’s in the same situation as MTVs were a few years back.”

Mary Soh knows that if wine becomes just another speculative product, the aver­age customer, unable to afford high-priced quality wine, will suffer. “Every bottle of wine has its own special character,” she says. “I like it when I see a lot of custom­ers buying wine priced between NT$400 and $1,000 [US$15 and $35]. Wines in this price range are actually the fastest-moving products we sell. Last year the equivalent price range was NT$500 to $800 [US$18 to $29].” She is encouraged by the knowl­edge that many wine importers are now focusing their attention on the midrange market by setting up counters in supermar­kets, thus giving the ordinary shopper easier access to wines that are fairly priced.

Given all that, it has to be said that there is still some way to go before the price of wine in Taiwan approximates that in Europe. Tariffs remain high: NT$119 [US$4.32] per liter, and NT$89.25 [US$3.24] for a standard, 0.75-liter bottle of wine, irrespective of quality. Mary Soh complains that under the flat-tariff system her company sometimes has to pay more in tax than it paid for the wine. Margins, according to her, are very small, particu­larly with some of the smaller importers who just want to sell irrespective of the size of their profit.

Not everybody agrees with her. Classical cellist and cello teacher Christopher Tseng (曾世偉) goes so far as to label the Taiwan wine market a rip-off. “Sometimes I get lucky and manage to pick up a bottle for NT$600 [US$22], the same as it would cost me in France,” he says. “But most wines that sell here for less than NT$10,000 [US$363] are priced at three to four times what they would cost over there. Wine has the image of an ex­pensive luxury here, and that isn’t right. Importers shouldn’t price wines out of their league.” Tseng understands the flat­ tariff problem, but he maintains that most importers are ratcheting up profits by con­centrating on midrange wines, which is where the bulk sales are to be made.

Tseng knows that importers are unlikely to change their ways in a hurry. He relates how he was once at a dinner party where the host brought out a bottle of wine that cost NT$15,000 [US$545]. The guests drank it—and seven more bot­tles of the same wine. “Some people have their own wine cellars,” he says. “They order directly from the importers, without even knowing what kinds of wine and how many bottles they will get. The importers take care of everything for them.”

Mary Soh and William Hsu both regard educating the average person how to appreciate wine as an important factor in expanding and con­solidating the market. In the past, ship­pers would only offer winetasting classes to the staffs of local hotels and restaurants. “Because in the early days, those were our first and only custom­ers,” Soh explains. But now, winetast­ing classes are available to anyone who is interested in wine and wants to learn more about it. Hsu’s class of hospital doctors is but one example. Today his teaching schedule is almost fully booked. And if the truth be told, most local wine drinkers could probably use a lesson or two. Frank Yen (嚴家義), who has been importing liquors ever since the ban was lifted in 1987, runs two wine bars in Taipei. He is quite clear in his own mind that, while drinking wine is becoming popular, most people know very little about it. “They’re just being trendy,” he sneers.

From discussions with the students who attend his wine classes, and through talking with customers over the phone, Hsu has found that women tend to be more inquisitive and budget-conscious than men, although men still make up the bulk of their clientele. “Sometimes I get calls from women who go on and on, asking all sorts of questions about wine,” he says with a smile. “Men are normally very asali [a Japanese word often used in Taiwan to describe a person who does not want to go through the bother of bargaining and makes decisions quickly]. They’re not so interested in finding out about whatever I recommend. I can understand that. They’re busy, they haven’t got time to lis­ten, they just want to order and go.”

Mary Soh points out as more interna­tional companies enter the Taiwan market, it will become increasingly important for local workers to be familiar with Western culinary habits. Her company offers winetasting classes that at the same time seek to familiarize students with Western table manners. “In the past,” she says, “we used to have to approach local companies, asking if they needed our services. Usually the response wasn’t too enthusiastic. But this year we’ve received more inquiries from international companies than we can handle.”

There is now much greater access to information about wine in Taiwan. Winetasting classes are common, and numerous English-language books on the topic are available in major bookstores, along with a few Chinese treatises written by local connoisseurs. Some magazines now carry articles on wine appreciation. And 1996 saw the publication of a Chinese version of the popular Windows on the World Complete Wine Course, something that pleased Hsu very much. “Although there still isn’t enough information about wine available in Chinese,” he says, “publishers are finally waking up to consumer needs. Now that they’ve realized there’s a grow­ing market for wine, they’ve become more willing to make the effort to translate use­ful works into Chinese.”

Overall, Hsu is optimistic about the future of Taiwan’s burgeoning wine mar­ket. For one thing, it is guaranteed to be­come highly competitive—he estimates that there are already more than sixty wine importers in Taiwan, a figure that does not include the hotels and restaurants that import on their own account, and the number is steadily growing. “Competi­tion is good,” he says, “because it focuses society’s attention on wine.” And he knows that in Taiwan’s easy-come­-easy-go business en­vironment, only the best will survive. “Some people are probably going to think that this is a good business to get into,” he says. “But stick around—you’ll find that only a few of them have got what it takes to last.”