Wine: Maintaining Market Share

The reputation of Australian wine in China is booming, writes Jeremy Oliver.

Just as Australians begin to focus their attentions a little more closely on the World Expo in Shanghai comes some feedback from what is regarded by many as the world’s largest fair of alcoholic beverages, the China National Sugar and Alcoholic Commodities Fair in Chengdu, Sichuan. Covering no less than 13 million square metres of space, of which 1.4 million square metres were allocated to imported wines and spirits and representing an increase of 70 percent from the same event in 2009.
Just how ‘imported’ some of those beverages might actually have been is a question that must have crossed the minds of some visitors, at least, to the ‘Benfolds’ stand, which promoted knock-off bottles of most key Penfolds wines, complete with misspelt labels and even featured a picture of Penfolds’ chief winemaker, Peter Gago. Someone had figured that by creating another swirl on top of the ‘P’ in Penfolds’ name you could create the name ‘Benfolds’, which actually resembles very closely the way that most Chinese people pronounce the name of Australia’s most feted red wine producer.
Chateau Lafite, which is by some margin the most highly rated wine brand in China, also came in for similar treatment – even to the extent to which a potential buyer had to examine the corks and capsules quite closely to pick they were actually fake.
While this news must sorely frustrate Penfolds and its Chinese importer, ASC-Fine Wines, there are two points to take from this.
One is that the opportunity for wine has well and truly arrived in China’s secondary and tertiary cities. The other is that if Penfolds was not such a strong and prominent brand in China, nobody would bother trying to rip it off. There is plenty of evidence today that the wine market in China has expanded well beyond the four major cities and even the next tier of 20 cities. Even in the third tier of around 100 cities, Chinese people are beginning to buy and consume good volumes of wine. It is a domino effect that the wine industry has hoped for, but could now be in a position to really participate in.
The Wine Republic’s co-owner Campbell Thompson recently visited a town of about one million inhabitants a couple of hours from Shanghai, only to be amazed at the volume of imported wines being enjoyed in hotels and restaurants. “You didn’t see this a couple of years ago”, he said. “Back then it was just a little bit of Gallo and some of the other basic labels.”
Thompson talks eagerly of the growing Chinese awareness of and interest in wine. “Once we can tap into this new layer, there’s a huge market out there,” he says.
While France remains the paramount importer into China, Australia has an opportunity for China to become its largest market in its most profitable sector, above A$7.50 per bottle. To do this, imports from Australia would need to maintain a growth rate of 35 percent to 40 percent per year, but there is every chance that sales of premium bottled wine in China might increase at this rate or even above.
France is retaining over 40 percent by value and 25 percent by volume in China, but Australian wine is holding its own around 21 percent by value and volume.
With limited resources on the ground – a situation shortly to be improved significantly – we are keeping the Americans, Chileans and others at bay. It is critical for the future of the Australian wine industry for it to at least retain its existing market share as the Chinese wine market continues to develop.
The World Expo in Shanghai presents a powerful opportunity for Australia to showcase its wine wares to the Chinese market. Whether or not this country succeeds in this endeavour will largely depend on the clarity, quality and simplicity of the message we aim to deliver, and upon how well our marketing and representative resources can truly pull together. I don’t think there’s any doubt that if Australia presents itself in a cohesive and coordinated fashion, that our high expectations can be achieved.

*Contact the author: info@jeremyoliver.com or visit Jeremy’s website: www.jeremyoliver.com

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