China ‘not the El Dorado we first thought’

3rd April, 2014 by Lucy Shaw

Australian wine sales have fallen flat in China, with one producer admitting that the country is not “the El Dorado” the industry was hoping it to be.

Speaking to the drinks business during a visit to London this week, Judy Watson, finance manager of Barossa Valley-based Schild Estate said: “You’re mad if you don’t deal with China but you have to be careful. Some of the larger wine companies have invested a lot in the market and are feeling the sting.

“It’s not the El Dorado we initially thought it would be. People are getting hurt out there but the doors are slowly opening. Somebody has to be bold and make the first inroads there, but it isn’t the job of the small producers,” she added.

Australian wine sales have fallen flat in China since the Chinese New Year at the end of January due to the country’s austerity drive and a curb on government spending on luxury goods.

Currently the second most-imported wine into China, Pernod Ricard recently announced that sales of Jacob’s Creek in China had levelled off and were likely not to rise again until 2015.

The news will add salt to the wound of the Australian wine industry, which is also seeing sales slide both in the US and the UK.

To counter the lack of interest in Australian fine wines, Watson believes Australian estates should turn their focus to selling bulk wine to the Chinese.

The Chinese government's gift giving spend has been curbed since 2013

The Chinese government’s luxury gift giving spend has been curbed since 2013

“We don’t send our top stuff to China but are having success with selling bulk wine out there as that is where the demand is,” Watson told db.

“We’re loathe to send our top wines to China as you have very little control over where they end up and the danger is they will get discounted, which dilutes your brand’s strength and is both a risky and potentially damaging strategy,” she added.

Watson revealed that in her experience, the Chinese only want to deal with the bottom end of the Australian wine market.

“They are only interested in AU$4 wines, but they should really be focusing on what Australia has to offer in the $15-20 bracket,” she said.

The lack of enthusiasm for Australian wines in China is leading to a surplus of stock floating around the Asian market.

Up until 2012, China had overtaken both the UK and the US to become Australia’s fastest growing export market, though exports dropped 7% last year.

Last October, Treasury Wine Estates, which owns Penfolds and Wolf Blass, warned that demand for imported wine in China had waned as a result of the austerity drive.

3 Responses to “China ‘not the El Dorado we first thought’”

  1. Brian Raue says:

    Yes sales in China have flatenned out since Chinese New Year,
    I have successfully sold wine into China for over 20 years and the market has always been like a ‘roller coaster’ and will be for some time. The problem with most Australian companies they do not have the funds to invest into marketing so their sales will fall or not happen at all as a result.

  2. baku nagai says:

    Hi
    The “maneki neko” yo used to illustrate your article on China is a purely Japanese artifact that you won’t find anywhere in China expected maybe in some Japanese restaurants…

  3. C.Lawrence says:

    Ms. Shaw,

    Yes, as Nagai-san pointed put wrong symbol. Guess you could pay for my expertise as being based here, do know that and more too, so um, yeh. Drop me a line.

    C.Lawrence

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Job vacancies

Brand Ambassador – Santa Rita Estates

Santa Rita Estates
London or Hertfordshire but with flexibility to travel, UK

Sales Executive - Wine and Spirits Awards

The Drinks Business
Central London, UK

On-Trade Channel Manager

Delegat Europe Limited (UK)
London / Midlands, GB

Trade Marketing Analyst

Delegat Europe (UK)
London, GB

Key Account Executive

Delegat Europe Limited (UK)
London / Midlands, GB

Senior National Account Manager

Conviviality
London, UK

ON-TRADE Sales Executive

Roberson Wine
London, UK

OFF-TRADE Sales Executive

Roberson Wine
London, UK

Judging Week Runners

Decanter World Wine Awards
ExCel Centre, London E16, UK

Sales Administrator

Les Caves de Pyrène
Guildford, UK

Retail Commercial Executive

Laithwaite's Wine
Theale, Berkshire

Wine Buyer

Conviviality Plc
Crewe, UK

Sales Account Manager - On-Trade

Berkmann Wine Cellars
Liverpool

Sales Account Manager - On-Trade

Berkmann Wine Cellars
M3/M4 corridor

Media Sales Manager - Hong Kong

The Drinks Business Hong Kong
Hong Kong

The Global Merlot Masters 2017

Deadline : 31st March 2017

The Prosecco Masters 2017

Deadline : 10th March 2017

db Awards 2017

Deadline : 28th April 2017

The Global Organic Masters 2017

Deadline : 3rd March 2017

Click to view more

The Global Sparkling Masters

the drinks business is thrilled to announce the launch of The Global Sparkling Masters

The Global Rosé Masters 2016

the drinks business is proud to announce the launch of the Global Rosé Masters 2016.

The Prosecco Masters 2016

Now in its third year, the competition will reflect the growth in popularity of this fresh and exciting sparkling wine from the picturesque regions of Veneto and Friuli.

The Global Pinot Noir Masters 2016

After the success of last year’s competition that judged over 250 wines from no less than 16 countries, the drinks business is proud to announce the third year of the Global Pinot Noir Masters

Click to view more