Australian Wine Blossoms in Japan and South Korea

Australian Wine Blossoms

Rejuvenation in Japan and South Korea
Australian Wine Blossoms in Japan and South Korea

There was palpable excitement as to the future of Australian wine in Japan and South Korea at September’s 2016 Australian Wine Grand Tasting events. These are two markets for Australian wine that have had their fair share of ups and downs over the years, but in recent times they have been rejuvenated. Importers are beginning to show more faith in the Australian category, and key influencers are changing their outdated perceptions of Australian wine. Australia is no longer just about high-alcohol, fruity wines or entry level wines; Australia’s fine wines are forging a new era for Australia in Japan and South Korea, complementing the positive effects of our recent free trade agreements with them.

Events such as these are incredibly important to the success of our business in Asia. I can't think of another way to get our wine in front of this many wine buyers in the one place in markets like South South Korea and Japan.
Trent Griffiths General Manager, Helen and Joey Estate

Australian wine: excitement, energy, enthusiasm

The excitement, energy and enthusiasm at the events, which were held in collaboration with Austrade, was reflected by record attendances. Almost 900 influential members of the wine trade attended in Seoul and Tokyo and they were treated to our strongest ever showing of established and new-to-market fine Australian wines. It also gave them the chance to meet our talented winemakers and discover lesser-known varieties and styles. The Grand Tastings were complimented by two masterclasses. Esteemed wine writer and regional market expert Denis Gastin O.A.M., discussed the history and regional diversity of Australia’s most famous variety, Shiraz, in ‘Australia: A Continent of Shiraz’. For the first time in either market, Con Simos from the world-leading research organisation, Australian Wine Research Institute, presented an engaging masterclass on their research in identifying Rotundone, the key aroma compound responsible for the pepper character in Australian Shiraz. The reaction to these presentations, and to the event as a whole, was fantastic.  Makoto Tominaga, General Manager, Arcana Tokyo, summed it up perfectly when he said, ‘I have been coming to this tasting each year, and every time I come here, I can feel the preconceived image of Australian wine changing…’

Australian wine in the Asian century

The Asian Century:  it’s an oft-discussed concept in political and business circles, and is one that has particular importance to the Australian wine community. Australian wine exports in the 19th and 20th centuries were characterised by and driven by the British and American markets. These markets were vital to the establishment and growth of Australian wine and central to Australia becoming a major player on the global wine scene. These markets drove the first great Australian wine export boom in the 1980s and 1990s, but in recent years they have been usurped by markets closer to home. The projected 21st-century dominance of Asian politics and culture has spilled into a dominance of Australian wine exports. And while China drives Australian wine exports to Asia, Japan and South Korea are also important to the future success of the Australian wine community. Australian wine exports to South Korea increased by 29% in 2015–16 while exports to Japan increased by 4% to $44.7 million.  Positive signs for Australian wine in the Asian Century. So let’s take a quick look at these two markets and explore their possibilities for the Australian wine industry.

The Japanese wine market:  an overview

The Japanese wine market has witnessed a revival in the last two to three years after a slight improvement in macroeconomic conditions. These conditions look set to continue thanks in part to the buoyant mood and economic benefits from the upcoming 2020 Olympic Games in Tokyo. Concurrent with this, in exciting news for the diverse nature of fine Australian wine, a generational change is seeing a new wave of consumers and sommeliers moving the landscape of the Japanese wine market. Australia is the sixth largest exporter to Japan by volume and value and there are signs that Australian wine companies are taking advantage of this change and reaping benefits from the Japan–Australia Economic Partnership Agreement (JAEPA). Under JAEPA, the 15% import tariff on Australian bottled wine will be eliminated over a period of 7 years. Japan is already an attractive market for the Australian wine community owing to its large population and high disposable incomes. At first the statistic that wine does not constitute a large proportion of alcohol consumption in Japan, just 3% of the total alcohol consumed, may seem like a negative. Nevertheless, there is a growing market for wine amongst women in the late 20s to early 30s age groups who increasingly perceive wine as a sophisticated beverage of moderate alcohol content.  In general, the 30-39 age group (both males and females) consume the largest amount of wine. As a result, Japan has moved towards becoming a developed wine market in the last two years as off-trade sales continue to grow and wine moves into younger generations. The new wave of younger wine consumers are more adventurous and increasingly searching for new styles of winemaking and new varieties away from the traditional European styles.  This could be an exceptional opportunity for Australian wine. Natural winemaking, a style which Japan embraced before any other country outside Australia, and emerging varieties are just two of the hallmarks of the modern Australian wine paradigm and there is clearly the potential that this will resonate with the Japanese market now and into the future.

This is one rare and highly valuable opportunity where a given country’s producers, importers and those seeking that country’s wine all gather. The tasting therefore is a very important event for us importers.
Takahiro Ito, Sales Manager, Jeroboam (Japan)

The South Korean wine market:  an overview

With a population of 50 million, South Korea is Asia's third largest wine market and considered by many to be one of the most dynamic. In the twelve months to June 2016, Australian wine exports to South Korea were up by 29% to $13 million and predictions are for even greater growth in the import market over the next five years. While these figures are relatively small when compared to Australian wine’s major export destinations, it is already clear that the recent free trade agreement is starting to change the landscape for Australian wine in South Korea. Australian producers have gained a level playing field with some of their competitors with the South Korea-Australia Free Trade Agreement. Tariffs on Australian wine were removed when this agreement came into effect on 12 December 2014. This has played a significant part in driving confidence in the Australian category in South Korea, reigniting importers’ interest in and engagement with the Australian wine industry as a whole. This interest has flowed down to consumers with increased Australian wine offerings in the on and off-trade. Mirroring the generational change in Japan, the growth in South Korea is being largely driven by quality-conscious younger consumers who are looking for good value in their wines. This generation of consumers are heavily connected with social media and by Western lifestyles. Many observers are predicting Australian wines will be one of the key drivers of this future growth with our diverse range of fine wines resonating with this audience.

It was great to experience the diversity of grape varieties, rationality and styles in Australia through the Seoul Grand Tasting. I think this kind of event is exactly what we need in order to understand the potential of Australian wine in the South Korean wine market.
Ha Nui Park Sommelier, July Restaurant (South Korea)

Future success in Japan and South Korea

So while it is great to talk about the opportunity for success in markets like Japan and South Korea, it’s going to take hard work and persistent effort by the Australian wine community to ensure we take full advantage of these opportunities. Following the successful tasting events, Wine Australia’s Head of Market, Asia Pacific, Hiro Tejima, said, ‘In collaboration with our partner Austrade, the Australian Wine Grand Tastings across these two key Northeast Asian markets are our flagship Australian wine events for the Japanese and South Korean wine community.’ ‘We had yet another year record number of guests in both Seoul and Tokyo, and the sentiments from guests reflect a growing appreciation for fine Australian wine in both markets. We will keep sharing the message that Australian wine is of exceptional diversity and quality with our key Asian markets, ensuring Australian wine is top of mind with the region’s increasingly sophisticated wine consumers.’ It’s clear that there’s something very exciting happening in Japan and South Korea. Thanks to better market conditions, improved sentiment and generational shifts in wine consumption there is a clear and present opportunity for Australian wine. The time is right to grasp this prospect and ensure the market for Australian wine in Japan and South Korea continues its strong growth and together we can achieve this.

 

Disclaimer

This information is presented in good faith and on the basis that Wine Australia, nor their agents or employees, are liable (whether by reason of error, omission, negligence, lack of care or otherwise) to any person for any damage or loss whatsoever which has occurred or may occur in relation to that person taking or not taking (as the case may be) action in respect of any statement, information or advice given via this channel.


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