Australian wine in Asia Pacific

Opportunities for a Pan-Asian Success Story
5 minutes

Wine Australia’s latest Export Report shows a continuation of the very strong growth of our wine exports to mainland China, though the Asian region as a whole is increasingly attracting a lot of interest and attention from exporters.

Australian wine exports to the Greater Asia region increased by 26% in value to $964 million – 63% of those exports went to Mainland China - 29% went to other key Asian destinations, namely Hong Kong, Singapore, Malaysia and Japan. The remaining 8% went to Thailand, Taiwan and South Korea, followed by smaller but increasingly promising destinations of the Philippines, Vietnam, Indonesia, India, Cambodia and Sri Lanka.

Greater Asia now also registers the highest average value of Australian wine exported anywhere in the world, despite the decline in the average value by 8% to $5.95 per litre F.O.B. (Free On Board). It is also encouraging to see that 47% of the exports to Asia are valued at $10 per litre or more, a price segment that accounts for just 11% of the exports to the rest of the world.

Australian wines takes centre stage at Vinexpo Hong Kong 2018

In terms of Asia, beyond mainland China, Hong Kong is the most critical market for the Australian wine industry. This has been reflected in the fact that Australia has recently been chosen as the ‘Country of Honour’ at next year’s Vinexpo Hong Kong.

Hiro Tejima, Wine Australia’s Head of Market Asia Pacific, explains the significance of Hong Kong as the region’s wine hub:

‘Hong Kong offers multiple ‘benefits’ so to speak to the Western wine exporters, certainly Australian wineries, that range from the prevalence of the English language in business through the large presence of the expats and high net-worth customers to, obviously, Hong Kong being duty-free for wine.’

‘As a credible regional ‘showcase’ that influences Mainland China and many other parts of Asia, there is no place quite like Hong Kong; Hong Kong SAR Government does realise that and has put in place effective measures to ensure the safety and genuine quality of imported wine in Hong Kong.’

‘The opportunity to take centre stage at the French-originated Vinexpo show held in such a market is very strategic and pivotal as we think about the future of Australia’s fine wine in the Greater Asia.’

Being a regional wine hub means that there are sizable re-exports from Hong Kong - 43% of all imported wine to be exact - 95% of which are re-exported to mainland China and Macau.

Hong Kong finds good reason to buy premium Australian wine

So what about the domestic Hong Kong wine market? ‘Overall, things are tough,’ says Ben Cheung, Trading and Brand Manager of Watson’s Wine, Hong Kong’s leading premium wine retailer. Mr Cheung explains that people in Hong Kong share the view that the economy is tough and rental prices are high. ‘But people have deep pockets. They buy as long as there are good reasons for them to buy.’

In fact, there has been very strong growth recently for Australian wine at Watson’s Wine, where 80% of their customers are local Hong Kong residents. In terms of growth, Australian wines head up the list followed by wines from Spain, Italy and the United States. Mr Cheung says he can clearly see his customers’ openness to trust non-French wines and trade up the ladder. He believes it is a sign that they are convinced of the excellent wine quality delivered (by Australian wine producers) at only a marginal premium. ‘I am excited about this trend and also confident that we are on the right track’.

Strong distributor relationships key in Singapore

Singapore is another important destination for Australian wines, with 286 Australian exporters working within the region this past year. Exports to Singapore increased in value by 13% to $68 million. One of the key contributors to this growth is Taylors Wines. Their Regional Director China and Asia, Laurence Lau, attributes this success to the strategy employed by their local partner.

‘Our sales in Singapore have grown rapidly in the last two years as our distributor has successfully set up new shops at popular shopping malls, opened new channels in the CVS segment and rekindled the relationship we once had with a major retail group,’ says Mr Lau.

Chris Coburn, Regional Business Manager Singapore & International Hotels South East Asia for Treasury Wine Estates (TWE), agrees on the importance of working closely with and empowering the local importers and distributors.

‘To achieve strong growth in markets such as Singapore, you need to invest in building a really close relationship with your distributor, so you can together create a strong market presence,’

TWE’s strong distributor relationship has enabled targeting ‘off-High Street’ thus further expanding their reach into the heartland sections of Singapore; driving wine education while targeting the right flavour profiles and employing a sensible pricing strategy.

Their strong distributor relationship has enabled targeting ‘off-High Street’ thus expanding their reach into the Chinese and Indian sections of Singapore; driving wine education while targeting the right flavour profiles and employing a sensible entry pricing strategy.

Indonesia – a rising star for Australian wine exports

Another star of the July 2017 Export Report is Indonesia, which recorded a 45% increase in value.  With Jakarta being the largest city in southeast Asia with an estimated population (2016) of over 10 million people, Indonesia is a predominantly Muslim nation, thus many of us assume promoting alcohol there would be tough. Adam, Head Group Sommelier with The Union Group, Jakarta’s leading restaurant operator with 14 outlets, softly disagrees.

‘Except for some small cities where consumption of alcohol is restricted or prohibited, Indonesia is fairly relaxed, especially in Jakarta and Surabaya. Unlike Malaysia, it’s okay to drink wine in restaurants and bars in Indonesia, except for during Ramadan.’

Adam says that his customers are enjoying wine much more than a few years ago. What is even more exciting is that the wine consumption in Jakarta is mainly coming from the local Jakartans rather than from the expat community.

‘Many Jakartans study overseas, including Australia. Those who have returned from studying in Australia already know about Australian wine.’

In Indonesia there are only a small number (about 18) of licensed wine importers and distributors nationwide and each is expected to work within the Alcoholic Beverages Quotas and also reach a certain quantity of wine imports in order to retain their import license (please see the Export Market Guide Indonesia for more details). This can be a hurdle to market entry and a frustration as on the ground wine professionals and wine lovers are yearning for more selection.

‘We need more selection here as there are so many great wines in Australia. Currently, it is a red wine dominant market, and young people tend to enjoy fruitier wine. But we want to offer new regions, new varieties; something people haven’t tasted before. Tasmania, for example, would be really interesting for that matter,’ says Adam.

Clearly there is more to the Asian wine market beyond mainland China. The keys to unlocking it; whether that means going after the more sophisticated Asian destinations, the truly embryonic markets or both – is working closely and effectively with in-market partners. Building trusted relationships, driving wine education and starting to expand the selection, thus tapping into new segments whilst expanding the seams of others. What’s exciting about the Asian wine market is that wine is still a foreign concept to many of the people there and this makes it a frontier that is well worth exploring.


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