The demand for fine Australian wine in China continues to soar, with our most recent Export Report showing that Australian wine exports to the Chinese mainland grew by 50 per cent to $419 million in the 12 months to the end of June 2016. The Chinese mainland is now clearly our second most valuable export market, with exports only $30 million lower than the US, our number one export market by value. If we include the key market of Hong Kong, at $124 million total value, China is now the largest market for Australian wine exports.
Impressive Australian wine export growth around the world reflected in China
In the twelve months to June 2016, the total value of Australian wine exports grew by 11 per cent to $2.11 billion and volume increased by 0.5 per cent to 728 million litres. The average value of exports grew by 11 per cent to $2.89 per litre, to the highest level since February 2010. Bottled exports of Australian wine also increased by 49.7 per cent to $403.5 million and the average value of bottled exports grew by 7.1 per cent to $3.88 per litre.
Figure 1: bottled exports by top 5 destinations for MAT June 2016
The global trend towards Australia’s premium wines was reflected on the Chinese mainland, with exports priced A$10 and above per litre FOB increasing sharply by 71 per cent to $169 million. In these price segments, Australian’s most expensive wines shipped with an additional $70 million in export revenue generated.
Figure 2: exports of premium wine to mainland China by price segment
This reflects the improved perceptions of Australian wine amongst industry influencers in China, resulting in a growing number of importers taking on more premium Australian brands. This positive sentiment was highlighted by the success for Australian wine exhibitors at Vinexpo Kong Kong in May. Australian exhibitors, new and old, were blown away by the interest in their wines and their stories from influencers at the event.
‘Among all of the pavilions, it seemed to me that Wine Australia’s pavilion was the most popular, always crowded with visitors.’
Joanna Zheng, Product Senior Director at Amazon China
Australian wine exports to China - what are the key factors behind this growth?
The increasing appetite for premium Australian wine at high price points is among several factors to driving growth of the Australian category in China. The exceptional growth in Australian wine exports to the Chinese mainland was clearly aided by the introduction of the China-Australia Free Trade Agreement (ChAFTA) in December 2015, and the growing Chinese middle class’ increased interest in wine.
We are happy to see the demand for premium Australian wine in China has kept growing. The fact that ChAFTA came into force at the end of last year has helped with this growth, and also the increasing number of Chinese middle-class consumers. As China is in its way upgrading consumption structure, we believe Australian wines will be even more welcomed in the market. The prospect of Australian wines in China is promising.
Willa Yang, Head of Market, China
The success of Australian red wine in China continues
China's affinity with Australian red wines continued this year with Australian red wine's share of value increasing from 91 to 93 per cent. The value of red wine exports increased by 53 per cent to $390 million, while white wine exports increased by 14 per cent to $19 million. Shiraz continued to be the most favourite red variety among consumers on the Chinese mainland. Our most planted and most renowned variety occupied a 40 per cent share of exports to China. Australian Shiraz grew by 53 per cent to $158 million in the market. But it wasn’t just Shiraz that saw growth in the twelve months to June 2016, each of the top five Australian red varieties and blends had outstanding growth as shown in Figure 3.
Despite coming off a low base, it was promising to see growth in Australian white wines in the Chinese markets. Chardonnay was up by 20 per cent to $7 million, and remains the dominant variety exported to China. Riesling also shows potential and registerd the strongest growth – up by 45 per cent to $1.4 million – with this growth taking place in higher price points. This indicates that changes in the Chinese market are expected as consumers’ tastes diversify, showing potential for future growth in this area.
Podcast: Interviewed at the recent Asian Cultural Workshop Paul Byron from Periscope Management talks about the potential for Australian white wine in this key market covering climate, cuisine and the need for education.
The next steps for ensuring continued success in China
As a result of the favourable trading conditions the number of Australian wine companies exporting to the Chinese mainland increased from 930 to 1176 in the year to June 2016. At the recent Asian Cultural Workshop, hosted by Wine Australia in Adelaide, attendees learnt how taking advantage of this potential will require patience, commitment and consistency from the Australian wine community. While this was the first event of its type, it was clear by the end of the day that the lessons learned will help Australian wine exporters to make better business decisions and build productive, lasting relationships in key export markets like China.
Podcast: Interviewed at the recent Asian Cultural Workshop Paul Byron from Periscope Management talks about the practical implications of this in conducting business in China.
Read additional articles related to the June 2016 Export Report:
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