20 Dec Thirsty: Chinese Demand for Australian Wine Continues to Rise
While still only in its infancy, Australia’s relationship with Chinese wine drinkers has proved to be a very successful venture. Only eight years ago, China represented just 10% of Australian wine exports, and strong recent growth and continuing demand has led forecasters to predict a very positive outlook for the future of this sector.
According to the latest data from Wine Australia, revenue from exports to China is set to grow by 6% per year for the next five years, with exports set to hit 3 trillion litres per year by 2022. China now imports more Australian wines than our next three customers combined. The US is Australia’s next biggest customer ($424 million), followed by the UK ($384 million) and Canada ($199 million). $1.05 billion of wine was exported to China in 2018, the equivalent of 234 million bottles.
The industry saw 29% in growth in the 12 months to September 2018 with the most popular price point being $2.50 – $4.99 / litre. There has been significant growth among more expensive drops, however. The $20 – $29.99 / litre bracket attracted growth of 73%, while wine priced between $50 – $59.99 / litre saw a demand increase of 47%. Success of the higher priced wines is likely due to China’s culture of drinking wine on special occasions, as well as its symbolism as a sign of wealth and class.
Chinese interest in wine, in terms of both volume consumed and desired quality, has improved in line with the perception of Australian wine quality. In 2010, Surveyed Chinese wine drinkers gave Australian wines an overall score of 7.69 out of 10, but by 2018 this figure rose to 8.32.
China has the highest average value per litre of the top 11 export destinations by volume, indicating a large amount of premium wine being shipped to this market,” said Peter Bailey, the general manager of market insights for Wine Australia.
The Free Trade Agreement has been one strategy which has considerably contributed to the success of the Australian wine exports to China. Between 2000 and 2015, the value of wine exports to China increased from $14 million to just below $1 billion, a figure which more than doubled after the introduction of the FTA in 2015.
“Pleasingly we have seen continued strong growth in Australia’s wine exports to China and through the China-Australia Free Trade Agreement there has been added motivation through the gradual reduction of win tariffs, providing Australian wine exporters with a competitive advantage over key producers such as France, Italy and Spain,” he said.
Australia’s grape growers and wine makers have experienced the spike in growth over the last few years, with one producer noting sales to China soaring by 300% in the last year alone. Chester Osborn from d’Arenberg Wines in South Australia exports around $4 million of wine to China, representing a tenth of their annual turnover.
“There are a lot of thirsty people over there and Australia makes a lifestyle they really quite enjoy. We are actively working with the market and doing a lot of tastings and dinners there. It’s a huge market and there are a lot of premium buyers out there,” he said.
Mr Osborn recognises the potential for the future of the wine industry’s involvement in the Chinese market.
“There are only 48 million Chinese drinking wine right now which is amazing because they drink quite a bit but there are 1.8 billion people there so the potential is huge.”