Winemaker toasts tariff cease fire

Vern Vierra, third-generation winemaker and owner of St Jorge Winery in Lodi, California, is preparing for a growing production line for the Chinese market.

"It's great that China and the US backed off from the tariffs and are trying to come up with good solutions," said Vierra. "I'm hoping they'll buy more of our wines now."

The world's two largest economies announced on Saturday that they will avoid a trade war, with China significantly increasing imports of US energy and agricultural products.

The added 15 percent tariffs from China, which went into effect on April 2 in retaliation for the US tariffs on China steel and aluminum, cost Vierra $7,500 to take care of the increased cost to his Chinese importer on a recent order.

The shipment of 1,000 cases of just released 2015 zinfandel is expected to be shipped to Shenzhen this month. Vierra said he will talk with the importer to adjust the cost if the tariff isn't imposed.

It's the first order from the Chinese mainland since the boutique winery specializing in Portuguese varietals recently signed an exclusive 10-year agreement with the Shenzhen Wine Industry Association.

The partnership is expected to boost the winery's production from 3,500 cases a year to 5,000, said Vierra.

"The money from the sale is being reinvested to produce more wines for China," said Vierra. "We are buying new equipment and bottling lines."

The goal is to export at least two containers, or 12,000 bottles, to China a year to meet the demand, he said.

Despite the small production, St Jorge's wine will grow popular among Chinese consumers as the Chinese middle class and millennials are taking great interest in California's boutique wines, said Xu Hao, a representative of the Shenzhen Wine Industry Association in California.

The association said it will buy as much as or more than the first order from St Jorge in the next 10 years.

"If China commits to a contract with a certain amount of our production, it's almost a guarantee and that guarantee is worth a lot," said Vierra. "This is not a one-time thing."

"Once the customers like our wine, they want more and they want good quality constantly," he said. "We'll introduce other varietals after the zinfandel."

The Lodi appellation is home to 100,000 acres of wine grapes and boasts about 100 wineries. The Shenzhen Wine Industry Association has made Lodi zinfandel its leading product to market in China this year.

"The Chinese market is developing rapidly and it has a huge potential for imported wine consumers," said Pat Patrick, president and CEO of the Lodi Chamber of Commerce. "While China proves to be an exciting market, the wine industry has also seen an increasing interest from Chinese consumers."

The Chamber of Commerce has made many trips to China and also hosted many delegations of wine buyers from China in Lodi, said Patrick.

US wine exports to China account for only 1.6 percent of Chinese wine consumption. The China wine market is forecast to reach $22 billion by 2020.

Contact the writer at liazhu@chinadailyusa.com