Wine Australia CEO: China ‘engine room for growth’

China is “the engine room” for the growth of Australian wine sales, stated Wine Australia CEO Andreas Clark at a briefing in London this morning.

When launching the State of the Sector Report by Wine Australia in the UK today, Clark drew particular attention to current and forecast growth rates of Australian wine consumption in mainland China, while noting more generally that Australian wine was in a “strong position”, commenting that, “there are so many reasons to believe in the future of the industry”.

“There is a lot of positive news,” he said, pointing out that Australia is enjoying the fastest rate of export growth since 2004, with exports up 15% in value and 8% in volume in the last 12 months. “We are selling more wine and getting more money for it; there is really strong demand for Australian wine globally,” he recorded.

Continuing he said, “Clearly the key engine room for that is China: the value of exports have increased by 63% [in the past year] to AU$848m – we are approaching $1 billion; it is huge growth.”

As a result, he announced that an AU$50m ‘Export and Regional Wine Support Package’ from the Australian Government would be put towards developing Australian wine sales in China, as well as the US over the next 2.5 years.

Speaking exclusively to the drinks business after the breakfast briefing, Clark stressed the “really strong position” held by Australian wine in China.

“We are second to France [in total sales] but we have the highest average dollar per litre out of the top five biggest exporters to China and we are growing strongly,” he recorded, noting that Australian wine sales in China were increasing at 30% in value, while French exports were up 5% – and the overall market for imported wine into China is rising at 16% (for the 11 month period ending November 2017).

Explaining Australia’s impressive sales performance in China, he told db that it was due to a combination of Australia’s good image and the hard work by the nation’s wine industry over the past 10 years.

“Australia’s image is really strong in China: the country is seen as clean, green, safe, and high quality, and that feeds down to Australian wine. And we have number of strong brands, in particular Penfolds – which has been a real pathfinder in China, although the growth has been enjoyed very widely and deeply by many producers,” he said.

Continuing, he stressed, “Although it is perceived as an overnight success, we’ve worked the market really hard, our producers have worked their contacts over a long period, and have gone into second and third tier cities, and that hard work is delivering for them now.”

He also forecast the positive impact of the China-Australia Free Trade Agreement signed in 2015, which will ensure that from next year Australian wine can be imported into China without any tariff.

“We see China as our strongest pathway to growth,” he concluded.

Some facts on the Chinese market for Australian wine from the report can be seen below:

• Australian wine exports by value to China: AU$848m (+63%)

• Australian wine exports by volume to China: 153m litres (+54%)

• Australian wine exports to China, average price per litre FOB: AU$5.55 (+6%)

• China accounts for more than half Australia’s exports of wine at AU$10 or more per litre FOB, growing by 75% to $377m last year.

• 95% of Australia’s exports by value to China are red wine, up 65% to $804m

• Australia white wine exports to China are up 33% to $30m

• Chardonnay is number one white wine, with exports to China up 32% to $14m

• Riesling is up 77% to $3m, and Semillon is up 29% to $2m

• The number of Chinese visitors to Australia has more than doubled over the past five years to 1.33m in the year to September 2017

All the figures in this story refer to mainland China, and therefore exclude exports of Australian wine into Hong Kong.