Greater China – opportunity for Chardonnay?

Historically, white wine has had very little presence in China. However, the latest export figures and consumer research shows that white wine is gaining traction in China, presenting growth opportunities for Australia’s major white variety, Chardonnay.

Greater China (mainland China, Hong Kong and Macau) is Australia’s largest export destination by value, with A$720 million of Australian wine sent to the market in 2016–17. Red wine dominates Australian exports to Greater China with a 94 per cent share. The remaining exports are comprised of white wine (4 per cent), sparkling and carbonated (2 per cent) and fortified (0.2 per cent).

Red wines are also the strongest growing category (up 33 per cent), almost double the growth rate for white wine (up 17 per cent).

Greater China is Australia’s biggest red wine export destination but is ranked fourth behind the USA, UK and Canada in white wine exports.  However, white wine exports are growing at a much faster rate to Greater China compared to the USA (up 3 per cent), UK (down 9 per cent) and Canada (down 7 per cent).  The only destination that recorded a faster rate among the top 10 markets for white wine exports was the Netherlands (up 45 per cent).

White wine exports to Greater China are dominated by single–variety Chardonnay, with a 45 per cent value share. Chardonnay is Australia’s major white variety with a 42 per cent share of the white winegrape crush in 2017. The value of single–variety Chardonnay exports to Greater China has increased by an average of 10 per cent per annum over the last three years, while the average price increased by 2 per cent per annum to reach $6.10 per litre in 2016–17. This is significantly higher than the average price of all single–variety Chardonnay exports of $3.70 per litre.

One of the reasons for the growth in white wine exports to Greater China is the rise in younger consumers on the mainland who are drinking wine and embracing different varieties. Those between the age of 18 and 29 now account for 37 per cent of the urban upper–middle class consumers of imported wine, making it the biggest age group. There has also been an increase in overseas travel by Chinese consumers which has led to more exposure to wine drinking cultures.

Data from MiBD Market shows that Australia dominates the Chinese grocery trade market in terms of share of Chardonnay wines, with 33 per cent of all Chardonnay wines on offer being Australian. Australian Chardonnay also grew at a faster rate than any other major source country in 2016 (see below).

Figure 1: Share of Chardonnay wines in the grocery trade in China by source country 2016

Source: MIBD Market

Recent research from Wine Intelligence shows that there is developing demand for white wine in mainland China, particularly Riesling, Sauvignon Blanc, Chardonnay, Chenin Blanc and Moscato. Chardonnay was consumed by 23 per cent of imported wine consumers in the previous six months, placing it just behind Riesling (29 per cent) and Sauvignon Blanc (25 per cent).

There is an upside for Chardonnay as, while 23 per cent had tried Chardonnay, 41 per cent of imported wine consumers were aware of the variety. The challenge is to convert the 18 per cent that had not consumed Chardonnay but were aware of it.

Helping drive the growth in whites is that wine is increasingly seen as suitable for informal meals and relaxing at home. The Wine Intelligence research shows a positive food matching for white wine, particularly with seafood and lighter dishes in East and South China.

The Wine Intelligence research shows that opportunities for growth in white wine exports to China exist amongst the ’developing drinkers’ and ‘social newbies’. Together, these two groups account for 44 per cent of the imported wine consuming population and 36 per cent of the value spent. The ‘developing drinkers’ exhibit a growing interest in wine and are developing an appreciation for the product, while the ‘social newbies’ are younger consumers who are just beginning to learn about wine and see it as an interesting wine variety for social occasions. They may be more open to drinking white wines compared to other consumer segments.

For more information on the China wine market, please contact Wine Australia’s China team at china@wineaustralia.com