Despite the slowing Chinese economy and President Xi Jinping's campaign against corruption and government extravagance, the Chinese wine market has continued to provide strong growth opportunities for Australian producers.
Latest figures from the General Administration of Customs show how the Chinese wine market has shrunk nationwide in 2014. According to China daily, during the first eight months, Dalian, Shanghai and Shenzhen customs saw value of imported wine drop on year by 6.7%, 25.6% and 5.2%, respectively.
In terms of actual volume however the fall in Shanghai was considerably less and the other regions actually experienced an increase in volumes, suggesting a slow down in the high-end market. During the same period, Shanghai experienced only a 5.8% fall in import volume, while Shenzhen and Dalian saw an increase of wine cleared by customs of 7.7% and 1.9% respectively.
Thus, while consumption of high-end products has been suppressed, momentum is picking up in the mass market. Grant Viney,
General Manager Sales for Asia at Accolade Wines, which encompasses wineries and brands including McLaren Vale and Hardys, confirmed that this has been felt across the market.
“At the high end of the market it has definitely been felt, due to the fact that much of the purchases were used as either gifts or for conducting dinners and banquets to influence other parties,” Ms Barclay said. “The lower end of the spectrum is largely consumed differently, so [decline] has been less noticeable at this end.
Data indicates wine drinkers across the country are shifting to cheaper choices. During the first eight months, average prices of imported wine in Shanghai, for example, dropped 21.1% compared to the previous year.
The latest Chinese market study surveyed more than 1,000 18 to 49 year olds who drink imported wine at least twice a year. The survey found that over half (52%), of those who drink wine at home do so once a week or more. Another 28% of leisure drinkers enjoy wine at least once a month.
According to a recent survey by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, French wine-producing regions are still the most recognised in China, with Bordeaux recognized by 76% of respondents and Burgundy by 53%. An impressive 44% had heard of Barossa Valley, the most well-known Australian region, while around a third of respondents were aware of the Yarra Valley and Italian regions such as Tuscany and Barolo.
Australian wine-makers are expected to be some of the big winners of the recently endorsed Chinese-Australian bilateral free trade agreement, which was signed following the Brisbane G20 meeting.
In an interview with the Herald Sun, Steve Webber, chief winemaker at one of the largest vineyards in the Yarra Valley, De Bortoli, said he was excited by the possibilities that the new trade deal will bring. “China is a really exciting market. We’re all interested in seeing what will happen.”
Last week, Temple Bruer winery in Langhorne Creek became the first Australian winery to be organic certified under a new agreement with China.After a process which took months, Temple Bruer winery in Langhorne Creek now has the go ahead to export to the lucrative Chinese market.
“I don’t want to fall foul of the Chinese Government. The Chinese market is so large we just don’t want to make any mistakes,” Temple Bruer CEO told the ABC.
Mr Bruer said the Chinese market is vital to his company and having China as an export partner could be worth more than $760,000 and boost the winery’s export market by as much as 25%.
Further demonstrating that China is a clear focus for the wine industry in Australia, earlier this month, Summergate, a leading distributor of alcoholic drinks in the Chinese market and operator of subsidiary, Pudao Wines, announced that it was to be acquired by Woolworths Liquor Group for an undisclosed price.
“This acquisition comes at a time when the market is emerging into a new era of consumer-driven demand across the region,” Summergate said in the statement.
Regardless of the decline in high-end spectrum of the Chinese wine market, the combination of an increasing lower-end domestic mass market and the promised benefits from Australia’s recent free-trade agreement with China are destined to see Australian wine exports flourish in the coming years.
