Monday, May 12, 2014

China Luxuriates in African Chocolate, Wine

FRANSCHHOEK, South Africa—In the evening shadows of Franschhoek Mountain, 240 tipsy Chinese foot soldiers celebrated their success pitching Africa's fine farm products to the Chinese consumer.

The top Chinese salespeople of L'Huguenot winery—who each sold at least $32,000 of the wine, earning them a trip to the South African vineyard—quaffed Chenin Blancs and Shirazes here last month Collectively, they sold 1.5 million bottles of L'Huguenot in China last year.

By next year L'Huguenot, a Chinese-South African joint venture, hopes to launch a cheaper varietal that its South African chairman thinks could double his sales. "China is where our future lies," said Hein Koegelenberg as he presided over the red-faced revelry.

Facing slowing demand from Western markets, Africa's farmers have found new opportunities in China. Hundreds of millions of Chinese are indulging in chocolate, wine, and snack nuts for the first time.

China's chocolate imports jumped to $352 million last year from $99 million in 2009, according to the International Trade Center. Wine and coffee imports also tripled over that period. Last year China became the world's top consumer of red wine, says London-based International Wine & Spirit Research.

China's taste for haute cuisine has plenty of room to grow: The country consumes just 1% of the world's coffee, according to the International Coffee Organization. But demand is growing fast: By 2015, Starbucks Corp. SBUX +1.02% plans to have 1,500 stores in China, second only to the U.S.

Long reliant on buyers in the U.S. and Europe, whose demand has leveled off, Uganda Coffee Development Authority turned to China three years ago. In Beijing, the company—which is owned by Uganda's government—opened a roasting plant to make coffee branded Uganda Crane Coffee Ltd.

Selling Crane coffee at restaurants, hotels and coffee shops across China is more profitable than the raw beans it has long sold in the west, according to Henry Ngabirano, the company's managing director. He wants to double exports to China by 2016 from 10,000 tons annually for now.

Even South African goatherds are benefiting from China's growing affinity for the finer things.

South Africa is the top producer of mohair, the wool of Angora goats used to knit fine coats and sweaters. Output fell for 23 years running through 2012, says Deon Saayman, general manager of Mohair South Africa, an industry body. Then a surge in demand from China, the second-biggest mohair buyer behind Italy, pushed up production in 2012. Output grew about 3% again last year to 2.4 million kilograms.

"China is becoming a more sophisticated market," Mr. Saayman says.

Meanwhile, global cashew prices are expected to rise 20% through 2019, as China pushes past the U.S. as the globe's top market for the nuts. To hold prices steady, Africa—which farms half of the world's supply—would have to boost production 9% annually, "and that's a tall order," says Jim Fitzpatrick, publisher of Cashew Club Monthly, a trade magazine.

Planters who are scaling up are cashing in. Joseph Yeung, the managing director of Mim Cashew and Agricultural Products Ltd. realized last year that he could sell his nuts for 10% more in China than in the U.S.

The reason? While Americans tend to reject nuts that are broken or discolored, the Chinese "don't mind," said Mr. Yeung, a Chinese-born immigrant to Ghana. That newfound profit margin is funding his next step: He's planting another 1,500 acres of cashew trees to keep up. Within three years, he expects to sell half his nuts in China.

Mr. Koegelenberg, the South African partner in L'Huguenot winery, turned eastward a decade ago after struggling to lift demand in the U.S. for his top-end La Motte brand.

He persuaded Woo Swee Lian, president of Perfect China Ltd., a direct-sales firm, to start a joint venture in South Africa that would make wine specifically for the Chinese market.

Given the Chinese predilection for French wines, Mr. Koegelenberg says the obvious home for the winery was Franschhoek, Afrikaans for "French corner" and so named for the French Huguenots who settled here in the 1600s.

Messrs. Koegelenberg and Woo bought a vineyard in 2013 to make three wines, a Chenin Blanc, Shiraz and Shiraz-Pinotage blend under the L'Huguenot brand.

"In China, all the best-selling wines are French, and they start with an 'L'," Mr. Woo says of the partnership's choice of a brand name that plays up Franschhoek's French connection.

Another successful gambit has been the annual trip to South Africa for L'Huguenot's top salespeople, after they've made the $32,000 in wine sales necessary to secure their passage to the Western Cape wine lands.

Liu Jun, a 29-year-old saleswoman from Inner Mongolia, said her customers like L'Huguenot wines because they are more pleasant than higher-alcohol Chinese equivalents fermented from rice. As she navigated between grapevines in leopard-print sneakers, Ms. Liu acknowledged she was a little bewildered by the wine's African origins—she thought the whole continent was hot and dusty—before she got to visit the vineyard.

"I can't believe they can make such nice wine in Africa," she said, popping a plump Shiraz grape in her mouth. "Very sweet!"

—Nicholas Bariyo in Kampala, Uganda contributed to this article.

Write to Patrick McGroarty at and Drew Hinshaw at

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