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From Lodi to China

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Posted: Wednesday, April 4, 2007 10:00 pm

Watts Winery announced plans this week to sell 1,700 cases of wine to China - a likely first among the area's boutique wine operations.

Owner Craig Watts, a third generation Lodi grape grower, said he hopes the pending sale will boost his relatively new wine brand and perhaps put Lodi on the map in the Far East.

"Desperate times call for desperate measures," said Watts, noting vineyards like his and many others must find creative ways to raise revenue in a competitive industry.

The Watts family has been growing grapes for four generations and started their winery in 1999.

"I'm not afraid to take the chance (of selling wine in China) especially when we're up against the wall like we are."

He noted that the glut of grapes produced during the past five years or so has hurt wine prices.

Last fall, Watts greeted a delegation of restaurant and hotel representatives from China at Lockeford's Vino Piazza, where he operates his tasting room.

That meeting, plus help from Frank Gayaldo, a local wine broker, led to a letter of intent from the U.S.-China Export Association to export the wine to China.

A few details must still be worked out, but Watts said he hopes to ship his first cases by September.

Gayaldo noted Watts would be the first small Lodi vintner to make such a move. He said, ideally, the agreement will lead to Lodi wines being served during Beijing's 2008 Olympic Games.

"We're just knocking at the door," said Gayaldo, a Lodi native and grape grower. "This is the beginning of something hopefully fantastic for Lodi and China."

• 95 percent of all U.S. wine exports are from California.
• 106.8 billion gallons exported worldwide by the U.S. in 2006, up 4 percent from 2005.
• 917,761 gallons exported to China in 2006, up 44 percent from 2005.
• 921,724 gallons exported to Taiwan in 2006, up 20 percent from 2005.
• 701,397 gallons exported to Singapore in 2006, up 79 percent from 2005.
• 7.4 million gallons exported to Japan in 2006, up 30 percent from 2005.

Gayaldo said Hands Across Ocean LLC, a corporate member of the nonprofit export association, would export the wines once the deal is complete. The export association was founded in 2006 and is based in Berkeley Heights, N.J.

Mark Chandler, executive director of the Lodi Woodbridge Winegrape Commission, said he couldn't think of any local, small wineries that have cracked the China market.

"For them to do that is a real coup," Chandler said. "There is a big middle class and upper class developing in China. So, it's great the Watts are in the front of that trend."

The language barrier and a low price level have kept local wineries from entering China in the past, Chandler said. He noted that small Lodi operations have focused on the local and regional market instead, though a few have sold to customers in Japan.

Gayaldo acknowledged it will take "a unique marketing strategy" to reap a high price from China.

Still, he said, he's confident money can be made, noting Watts has an award-winning product.

"There is a market for high-end products but it don't come easy … there are five-star hotels," he added.

Finding the right connection in China, or any foreign country, is the key to exporting wine, Chandler said.

"You simply can't manage it by yourself," he said. "It is a relationship-based business."

Contact reporter Chris Nichols at chrisn@lodinews.com.

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