Australian fine wine “flying” in China

13th February, 2013 by Lucy Shaw

Sales of high-end Australian wine are “flying” in China at the moment according to Darren Rathbone, chief executive of the Rathbone Wine Group.

Xanadu Dragon Shiraz is popular in Asia

Xanadu Dragon Shiraz is proving popular in Asia

Speaking to the drinks business in London this week, Rathbone, who presides over Australian fine wine brands such as Yering Station and Mount Langhi said:

“Australian fine wine is flying in China at the moment. We’re successfully distributing our wines through The Wine Republic in China, which we co-own.

“In terms of imports into China, France is out in front, but Australia is a close second in both volume and value sales and considerably ahead of Chile.”

Rathbone admitted that the thirst for Australian wine in Asia is driving some producers to pull out of Europe and turn their priorities eastwards.

“A lot of Australian wine companies are chasing the Chinese dragon at the moment and are pulling out of Europe because it’s too expensive to be there.

“Everyone is squeezed by the strength of the Australian dollar, but it’s important for us to remain in the UK market and we won’t be pulling the rug out,” he said.

In terms of the most popular Australian wines in the prestige-driven Chinese market, Rathbone revealed that Penfolds Grange is seen as the Australian Lafite.

“They’re developing a taste for big reds in Asia. It’s different to the European market in that consumers are not driven by regionality but by strong brands.

“Langhi Shiraz is by far our strongest brand in China. I have people coming back and asking me for the more expensive wine in the range but we don’t have one,” Rathbone told db.

Having discontinued a Shiraz in the Xanadu portfolio called Dragon due to poor global sales, Rathbone reinstated it in Asia after huge demand to bring it back.

“They’re big on symbolism in Asia and dragons symbolise power and good fortune. There was an uproar when we stopped Xanadu Dragon Shiraz, so now we sell it exclusively in the Chinese market and it does really well over there.

“Conversely, we don’t sell Xanadu Next of Kin Shiraz at all in Asia because they associate the name with death,” he said.

Last year, it was reported that Rathbone had put the Rathbone Wine Group up for sale, though he is keen to dispel the rumours.

“We’ve been looking into ways to reduce our debt by restructuring the company. We’re looking to bring an investor in to the group, but not sell the entire company.

“I’ve been in talks with a number of Chinese companies. The most serious contender so far has been the Ma family, as they already own Ferngrove in the Frankland River region, but they weren’t the right fit for us,” Rathbone said.

Darren Rathbone

Darren Rathbone

As for the rumours that Treasury Wine Estates is up for sale, Rathbone believes that while the lure of owning the Penfolds brand is strong, there is a lot of dead weight within the company.

“Penfolds would sell in a second but there are a lot of sick brands in the Treasury portfolio and whoever buys it would have to take them all on,” he said.

Last December, Rathbone sold boutique winery Parker Coonawarra Estate to small South Australian wine company Hesketh Wines, reportedly for AU$6-7m.

Keen to work with the banks and trade his way out of debt, he recently raised the price of the Yering Station Reserve range to AU$90 a bottle.

“I wanted to put it where it should be in the market as we were under pricing it. Wine is a fashion product and we need to focus on the top end,” he said.

However, he has also added an entry-level Village range to Yering Station, made specifically with food matching in mind.

Rathbone is candid about the fact that the Australian wine industry is going through a tough time.

“We’ve got tractor drivers resigning to work on oil trucks as there’s more money in it.

“Australia isn’t competing at the Jacob’s Creek and Yellow Tail end of the market anymore because you can get those wines cheaper from other parts of the world.

“There will be a lot of consolidation within the Australian wine industry this year and a change in direction away from Europe and towards China and South East Asia,” he said.

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