The Malaya prospects

The Malaya prospects

Market insights into Singapore and Malaysia
The Malaya prospects

In Australia we often say Asia is our backyard, and there are few destinations closer to Australia than the Malay Peninsula, which covers both Singapore and Malaysia. Just a four and a half hour flight from Perth, the Malay Peninsula’s geographical proximity to Australia has seen us develop a close relationship with these two countries. With an ever-evolving wine and food culture in these countries, Australian wine exporters should be excited by the export opportunities in both Singapore and Malaysia.

Singapore and Malaysia demonstrate multiple elements of what we want to see in export market development. Singapore offers sophistication, knowledge and expertise in wine appreciation, whereas Malaysia offers commercial scale and rapid advancement as a wine consuming market.

Market overview and latest performance

Singapore, an already familiar market to 284 Australian wine exporters, is an influential and key wine trading hub in Southeast Asia. Australian wine has long been number one in this market, and as of December 2016, Australian exports to Singapore increased in value by 16 per cent to a record $69 million (and volume by 5 per cent to 5 million litres). The value growth of late compares to the 5-year CAGR (compound annual growth rate) of 8 per cent per annum, showing strong growth in the recent months. The current growth is heavily weighted to the high-end, with 78 per cent of the value of exports at $10 or more per litre free on board (FOB), up by 32 per cent to $54 million. The average value of exports to Singapore is $12.66 per litre FOB.

In the previous two years, Australian wine exports to Malaysia had grown by an average of 44 per cent; however the latest Wine Australia Export Report shows a slight decline by 1 per cent to $54 million (while volume increased 1 per cent to 5 million litres). Despite this blip Australia is the top-ranked imported wine category in the market with a 41 per cent share of imports, ahead of France with 12 per cent. This is an important, must-watch market for the Australian wine community. There are some key market similarities with Singapore, with the average value of exports to Malaysia also high, at $11.82 per litre FOB.

Figure 1: Value of Australian exports to Singapore and Malaysia

What’s happening in these markets?

The success of our high-end fine wines in these markets can be attributed to both the strong, commercial efforts of our leading wine brands and a strong appetite for and interest from the key wine influencers in ‘new’ Australian wine offerings. In support of this is the dynamic change taking place in the fine dining scene, especially in Malaysia, which has triggered the demand for fine wines from around the world.

Those who have had the pleasure of visiting Singapore associate the city nation as a foodies’ paradise where eating is likened to a national sport. There are 29 restaurants which have been awarded a star (or two or three) by the inaugural Michelin Guide Singapore released in July 2016. While Malaysia has no dedicated Michelin Guide for Kuala Lumpur yet, in the last few years a number of new restaurants by Michelin-starred chefs have opened up in the Malaysian capital. A notable example of this trend is Taka by Sushi Saito, the three Michelin star sushi restaurant in Tokyo. The restaurant chose to open its first and only international sister restaurant not in Hong Kong or Singapore and not in New York, London or Paris, but in Kuala Lumpur. This may seem like a bold move, but it’s symbolic of the growth prospects and the likely wealth in this part of Southeast Asia.

Needless to say that fine dining goes hand in hand with fine wine. Stronger demand for high quality cuisine leads to higher expectations in food and wine service. As a result local wine professionals and sommeliers are expected to advance their experience and knowledge, which encourages them to be more adventurous, proactive and confident. This is exactly what’s happening in Singapore’s wine scene, with new wine bars opening up and serving quirky, artisanal wines that reflect the current wine trends seen around the world.

Both in Singapore and Kuala Lumpur, Wine Australia recently held events to meet the demand in-market to delve more into the world of Australian wine. Our Global Education Manager Mark Davidson shared an overview of the diverse Australian fine wine offering with 80 wine professionals in both markets through two master classes, ‘Old Vines and Classics’ and ‘Australian Gems’. The positive response from guests to these master classes was indicative of the renewed interest in Australian wine; in Singapore the guests were eager to recommend these ‘new’ Australian wines to their peers; while in Kuala Lumpur there was a strong signal indicating a positive perception change of Australian wine quality and diversity.

>Guests at the master class in Kuala Lumpur
Guests at the master class in Kuala Lumpur
>Guests at the master class in Singapore
Guests at the master class in Singapore

Guest feedback from the master class in Kuala Lumpur

“The insights into the emerging new trend of terroir driven, regional wines was very positive for me”

Wong Yin How Company Vintry Cellars Sdn Bhd

Guest feedback from the master class in Singapore

"I enjoyed tasting the unusual varieties and vintages"

Richard Chai, NTUC FairPrice Co-operative Limited

"I gained additional knowledge and insights about Australian Wines”

Johnny Leong Company Integrated Wine Resources

Our next move – for new-to-market wineries

To ensure that we continue to maximise the commercial export opportunities in both markets, our next key activity in this region is a new-to-market Australian wine showcase in Kuala Lumpur in late January 2018 (postponed from May 2017). This activity is proposed in response to feedback in-market that they want to discover new and unique Australian wine beyond what they already know and drink. This showcase will be a great way for new-to-market wineries to visit and better understand the market, and meet in person key importers keen to do more with the Australian wine category. If you are a winery interested in exploring commercial opportunities in the Malaysian market you can learn more about this activity and register here by mid November 2017.

Tips for success in the Malaysian and Singaporean markets

Our concentrated efforts on the Malay Peninsula make sense as an entry point to broader Southeast Asia. This is one of the most exciting regions in the world for Australian wine exports, with a diverse range of markets of varying maturity and opportunity. As a whole the region exhibits certain common traits, important to understand for anyone looking to export to these markets, including:

  1. they both have small but growing wine professional communities;
  2. they both have a high percentage of English-speaking wine trade;
  3. tourism is vitally important to the region; and
  4. considerations for state religions (e.g. Muslim) where consumption of alcohol is prohibited but there remains a large percentage of the local population who do consume alcohol in these markets. If you’re interested in learning more about the religious considerations, a relevant article can be found here.

Compared to the much larger and more advanced wine markets in Northeast Asia, wine is yet to become an integral part of the lifestyle among the people of Southeast Asia. Those who enjoy wine are either wealthy locals who have likely been educated abroad, expatriate Westerners or foreign tourists. In one sense, it is straightforward as English is the common language in the wine business, but there are a range of business customs which require understanding and preparedness to ensure success in these markets. The experiences gained in Malay Peninsula markets will help prepare Australian wine exporters for capturing further opportunities in other parts of Southeast Asia, including Indonesia, Thailand, Vietnam and the Philippines.


1 comments

Lim Hwee Peng CWE, FWS
15 Feb 2017 - 09:10 PM
Great snapshot of Singapore and Malaysia markets. Although from the ground, differences in market dynamics are apparent. Such as, population size between the two nations, vis-a-vis total volume and value imported. East and West Malaysia have their own ''individual'' sub-markets that may prove worthy than a generic qualification on Malaysia as a country. Within West Malaysia Peninsula, generally, Kuala Lumpur, Penang may seems obvious for wine enjoyment. One good gauge, is perhaps to look at the major or international banks locale, major or international airlines'' destination, to have a good gauge of wine demand, and which sub-markets to invest in.

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