WA's wine exports to China have been growing at a rate far beyond that of the industry’s key markets, but many local wineries believe it will take more than a decade before China becomes a significant customer of the state’s premium drops.
Western Australia’s wine exports to China have been growing at a rate far beyond that of the industry’s key markets, but many local wineries believe it will take more than a decade before the world’s most populus nation becomes a significant customer of the state’s premium drops.
China has jumped from WA’s 20th largest export market by value to 11th in the past three years, with the amount of wine shipped to China surging almost 600 per cent from 31,085 litres to 216,544 litres, which represents about 10 per cent of the amount of wine exported to WA’s biggest export market, the UK.
Several wineries WA Business News spoke to said while they believed China was an important market, they were pouring more time and effort into developing the key UK and US markets, and the emerging markets of Sweden and Singapore.
Sweden has jumped from WA’s 19th biggest export market in dollar value to 14th in the past three years, with the average dollar per litre dropping from $7.08 per litre to $5.72 per litre.
During the same period, the average export price to China sank from $11.32 per litre to $4.27 per litre.
WA wine companies say that while the Chinese are drinking more wine it is relatively cheap wine they are consuming, and it would be years before the market matures enough for WA’s premium producers to reap the rewards.
“They are not that different to the Australian consumer of the mid ’80s who started on chateau cardboard,” Watershed Premium Wines managing director Geoff Barrett said.
Ferngrove chief executive Anthony Wilkes said while he was pursuing opportunities in China, it was focussed on improving exports to the US.
Mr Wilkes said it took the winery between five and 10 years to increase its exports to the UK to 20,000 cases, and predicted it would take just as long to see a similar result from the Chinese market.
“It’s the second largest wine market after Japan, but it is in its infancy,” he said.
Mr Wilkes said Sweden and Denmark were more important markets for the company.
Mr Barrett is currently negotiating a potential $6 million to $10 million investment in his business from a Chinese investor. Part of the deal will involve supplying the Chinese with 80,000 cases of wine.
Mr Barrett said if the deal went ahead he would source fruit outside of Margaret River because he could not make wine from his current vineyards at the price point the Chinese were seeking.
Mr Barrett said he would not be targeting China as priority if he was not in his unique circumstance.
“There is potential down the track, but there isn’t huge numbers [from China] at the moment,” he said.
“If you are serious about exports, the greatest current potential in the US.”
Mr Barrett said the US wine consumer was more mature and therefore there was greater potential to export premium wine into America.
Alkoomi Wines owner Merv Lange said there was “tremendous potential” in the Chinese market but it would be at least a few years before his winery increased its presence beyond its existing distribution arrangement.
It only sells a few hundred cases to China. “There is a lot of work to be done,” he said.
Cape Mentelle marketing manager Nichola Holgate said the UK, US and Australia were the wineries key growth markets.
“China has been growing but there is a lot of wine education required,” Ms Holgate said.
