Australian Made wine in the Chinese Century

Last year Penfolds released its most expensive wine ever, the Bin 620 cabernet shiraz blend.

The price tag of $1000, a bit rich for most, created some interest, as did the choice of city – never before had Penfolds launched a wine outside of Australia – for the unveiling, Shanghai.

The Asian Century gets talked about a lot in terms of what it'll mean to Australian food and beverage makers.

The type of manufacturer that is expected to excel in the future is seen as one with a high value-add, high-quality product that appeals to the increasingly affluent Chinese middle class with a growing appetite for the finer things in life – such as wine.

Wine Australia released their Wine Export Approval Report last week to the sound of cheers from vintners who'd been putting more and more resources into the Far East. Sales to China were up 16.3 per cent by volume, and, much better still, 23.1 per cent by value, for the year to September.

"China's demand for premium wine continues to drive strong growth in the higher price segments, with the above $10.00 per litre segment a stand-out, up 37 per cent," Wine Australia's chief executive Andrew Cheesman said.

"The average value per litre of Australian bottled imports to China is now for the first time higher than the average for French wines," Cheesman explained.

The boom in sales of big, highly-alcoholic red wines to the United States starting in the late 1990s (encouraged by uber-influential US wine critic Robert Parker) has well and truly tapered off, and the Australian wine industry has shrunk significantly in the last few years.

China's appetite is, however, on the up and up. Since 2005-2006 we've grown exports to that market from $21 million a year to more than $200 million a year.

Earlier in the month CRI English, a Chinese news service, noted the increasingly prestigious image of Australian wine among the Chinese.

Australia is seen as an exporter with a unique, clean product, with innovation in growing techniques and packaging on its side.

"You know it's an enormous market, but the adoption of wine as a product beyond the novelty stage, which it is currently at, is going to take a while," Professor Tony Spawton of University of SA told CRI.

"The return from China, I would suggest, is going to be a long time in the future."

Red wine is seen as a mark of sophistication, a status symbol, especially if it's cheap (and, some have noted, especially if it's in a bottle sealed with cork). Cheap wine just won't do, explained  Zhang-yue Zhou, director of the AusAsia Business School at James Cook University.

"As a country we are not doing a good job of promoting our wine to the Chinese market, I think that's damaging to our wine reputation. In China, if (a product) is cheap, normally people will believe it's not good," he said earlier this year.

"They often associate their consumption to status, not to whether they enjoy the quality of the product."

And, perhaps highlighting the interest in expensive Australian reds, our higher end wines are good enough to copy, with bottles labelled "Benfolds" (an apparent aping of Penfolds) and "Hill of Glory" (a near-facsimile of Henschke's $600-a-pop Hill of Grace) spotted, and Grant Brinklow of Sandalford Wines last week suggesting the Federal Government needed to do more to combat Chinese piracy.

With China the fastest-growing market for wine in the world, the opportunities are strong for Australian winemakers to capitalise, so long as their product isn't driven downmarket where it's being sold.

And what can be learned from the gains being made in the Chinese market? It seems to be a case of a segment of Australian manufacturing playing to its strengths.

Our wines – and our food and beverage products in general – are seen as clean, innovative, high-quality products.

The variety of climates and soil types in Australia offer a wide variety of wine styles.

And it seems that the times very much suit winemakers.

Wine manufacturers are well-placed to take advantage of the Asian Century.

As long as quality and costs aren't cut, then our food and beverage makers can potentially do well out of the growing number of Chinese citizens who are able to afford – and who demand – top-shelf stuff to take away their hunger and thirst.

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