In the twelve months to June 2016 the value of Australian wine exports has grown by 11% to $2.11 billion. The average value of exports also grew by 11%, reaching the highest level since February 2010. Key markets in Asia like China, Japan and Hong Kong have been the main drivers of these increases and there is now a clear and significant demand for premium Australian wines in these markets. So how can Australian wine exporters take advantage of the opportunities in the Asia Pacific region? At the recent Asian Cultural Workshop in Adelaide we caught up with three Australian wine exporters; thought-leaders with extensive experience and success in selling Australian wine in these markets. We got their thoughts on where the opportunities lie for Australian wine in Asia and asked them how they are growing their business there.
Opportunity in Japan: free trade agreement shines a light on Australian wine
Australian wine producers have recently either gained an advantage over or secured a level playing field with some of their competitors in the Chinese, Korean, Japanese and Thai markets with the introduction of a raft of free trade agreements. As part of these agreements, tariffs have either been eliminated or are being reduced to zero over time. These free trade agreements have played a significant part in driving confidence in the Australian wine offering, particularly in Japan and South Korea, and have reignited the local importers’ interest in engaging more with Australian wine.
It’s made wine importers look at the Australian category again… the Japanese wine importers saw how fast Chile grew when they had their free trade agreements in place… So the free trade agreements have given us a focus and the importers are taking advantage of this.
Jonathan O’Neill, Angove Family Winemakers
The direct impact of the free trade agreement with Japan has been a 4 per cent increase in the value of Australian wine exports to Japan in the twelve months to June 2016. Importers are reassessing their portfolios and presenting an opportunity to existing and potential Australian wine exporters to Japan. According to Jonathan though this isn’t the biggest or most enduring opportunity in the Japanese wine market. Japan is currently undergoing a generational shift in alcohol consumption patterns with younger generations are turning to wine as the beverage of choice, forsaking the sake and shochu favoured by previous generations.
Podcast: Jonathan O'Neill from Angove Family Winemakers talks about the impact of the free trade agreement with Japan and how a new generation of Japanese consumers are embracing wine.
Opportunity in South East Asia: can Australian wine dominate the hotel and resort listings?
Numerous factors have contributed to the growth in Australian wine exports to Asia. Our geographic location helps – it’s easy for Australian wine exporters to travel to Asia. Australia also has a high degree of inward investment from Asia and the connections formed through education and migration to Australia. Australian wine exports have also benefited from a rise in consumption across Asia with nascent consumer awareness and interest in wine. We are also well-placed to benefit further from this as consumers across Asia start to change their drinking preferences.
The per capita consumption is South East Asia is very low - it’s low across the whole of Asia - so there’s still a lot of opportunity for us to do great business. I feel that because Australia is part of the region of Asia we have more to gain than our competitor set, Europe and North America, from being close and regional…
Andrew Tierney, Torbreck
While there is no point sitting around and waiting for these changes to occur, there could be a shorter term opportunity in South East Asia in the huge number of hotels and resorts that service one of the world’s busiest tourist destinations. Andrew believes that Australian wine producers are keenly placed to take advantage of this opportunity.
Podcast: Andrew Tierney from Torbreck talks about the opportunities in South East Asia for Australian wine exporters.
Opportunity in China: an emerging trend towards white wine?
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 vast majority of these exports, around 93 per cent, were made up of red wines with value increasing by 53% to $390 million. While the domination of Australian reds over whites is expected to continue for some time, there were some green shoots of growth for Australian white wines. Despite coming off a low base, there was clear growth in Australian white wines in the Chinese markets with value increasing 14 per cent to $19 million.
White wine in China is such a small volume at the moment but purely based on… their cuisine and the heat in the summer in many cities… it’s well suited to the Chinese market. Our biggest challenge is getting them to understand white wine…
Paul Byron, Periscope Management
Interestingly the growth in the value of Australian white wine exports to China is taking place at the 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. Paul is a strong believer in the potential for white wine in Chinese, but is adamant that education is the key if Australian wine producers are to take advantage of this emerging trend.
Podcast: 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.
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