New World wines thrive in challenging Chinese market

By Mathew Lyons

Published: 07 January, 2016

The market for wine is rebounding strongly for New World wines, according to reports in the Chinese news media.

In particular sales of wines from Australia and New Zealand are booming as Chinese consumers turn to more affordable imports, which are perceived to offer better value for money.

The market for high-value fine wines in China has collapsed over the last couple of years, in part as a result of a government clampdown on corruption which saw expense-account spending slashed.

However, China is now New Zealand's sixth largest export market for wine, according to the New Zealand Winegrowers Association.

"As Chinese consumption of New Zealand wine grows, we expect to see China rise up through the ranks," Natalie Potts, the association's marketing manager for Asia, told the China News Service.

Exports were up nearly 10% by value in the first half of 2015, she said.

Meanwhile, exports of Australian wines to China grew by around a third to £135 million in the year to end June 2015 - at a time when exports to its key market in the UK and US fell by 1.5% and 7.9% respectively.

"Awareness and demand for New World wines have definitely been on the rise in the past decade, which we expect to continue to grow," Robert Foye, Treasury Wine Estate's managing director for Asia, Europe, the Middle East, Africa and Latin America, told China Daily.

"In fact, we believe the love for wine has just begun in China.

"They have high interest and curiosity in trying different wine products, so they are willing to try New World wines.

"Despite sales slowdown in very high-end wines, people have switched to products with a higher price-performance ratio but also of a reputable and consistent quality."

TWE is aiming to establish its Wolf Blass brand as the leading imported wine in China by volume by the end of the decade, he said.

The brand has recently sponsored the NBA China basketball league, in replication of its strategy in the UK where it has previously sponsored both England cricket and rugby.

The scale of the Chinese marketplace is such that online retail is a vital route to market outside the major cities.

"E-commerce is an important channel for us to expand the distribution of our wines beyond first-tier cities into the hands of consumers that rely on online shopping in the second- and third-tier cities," Foye said, echoing ASC Fine Wine's comments on its strategy going forward as it shut its Shanghai Wine Residence recently.

Global analysts Mintel are predicting that the Chinese wine market will return to a healthy volume growth of around 4.6% in 2015, having slumped to 1.2% in 2014 from a high of 18.7% in 2012.

The market will continue to grow by 5% or more through to the end of the decade, it believes.

Red wine has a 75% market share, Mintel's data reveals, compared to a more typical 60% in maturer markets globally.

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