Chinese Appetite Boosts Wine Sales


DESPITE the frustration of humid and boggy harvest conditions in NSW vineyards, the Australian wine industry is on track for one of its better quality vintages of recent years - and better prospects in the price-squeezed wine marketplace.

Although global financial insecurity and an uncompetitively high dollar are undermining Australian export returns from key volume markets like America and Britain, Chinese wine drinkers are suddenly the toast of the local industry.

In the past 18 months China switched from being a buyer largely focused on bulk wine to paying good money for quality Australian bottled brands.

Chinese demand helped drive a 5 per cent rise in the average price of Australian bottled exports to $4.31 a litre in 2011 - the best price in more than two years.

A whopping 23pc lift in the value of Australian wine sales to China last year also propelled the Asian giant to become our third most lucrative destination for overseas sales (worth about $201 million), ahead of Canada and New Zealand.

With China's taste for wine flourishing - and its own vineyard expansions in overdrive - Chinese wineries are now lining up to learn more about making good wine from Australian experts.

Other thirsty Asian markets - including Hong Kong, Singapore, Thailand and Malaysia - are also on the rise as promising export markets said Winemakers Federation of Australia chief executive Stephen Strachan, South Australia.

"The good news is that not only are Australian wine exports to Asia rising, these markets tend to pay above the average for our export sales - particularly China," he said.

"The UK and US are still much bigger and very important markets, but we've got a real challenge in trying to turn lift our low price point reputation in these markets.

"Australian brands are the wines most likely to be consistently on discount in British supermarkets, and unfortunately UK sales are shrinking across the board as consumers spend less."

Exporters, who shipped 700m litres worth $1.9 billion overseas last year, were now retreating from the UK and US and paying more attention to China, where Australia is already the top international supplier behind France.

National Wine and Grape Industry Centre director Professor Jim Hardy said his institute received a lot of Chinese interest in using Australian production and market expertise to grow its industry.

Chinese companies were also actively seeking a stake in the Australian wine production and distribution sector.

"We've had delegations from two or three Chinese provinces keen to learn about production techniques," said Professor Hardy, based at Charles Sturt University, Wagga Wagga.

"They all want to be the best. One province was planting 150,000 hectares of new vines.

"There are some really good small scale wine brands emerging and there's scope for a lot of market growth in China, particularly as red wine is the official beverage served at important functions."

Although China's booming wine output is set to eclipse Australia's forecast 121m cases this year, Professor Hardy, said there were no signs of Australian imports losing appeal in China.

"They love Australian wine. I think we'd do well to keep building our market strength there rather than worry too much about the Chinese becoming export competitors around the world."

Although this season's Australian winegrape harvest was still dodging wet weather in NSW, with rain disruptions now troubling SA, the vintage was tipped to be a good one according to Wine Grape Growers Australia executive director Laurie Stanford.

"In general terms a mild season equals a good quality vintage -this year hasn't had many heat spikes and has been mild compared to most," Mr Stanford said.

However with the majority of red varieties still to be harvested before Easter, growers were nervous about rain which last year forced a lot of southern grapes to be left rotting on vines.

Early estimates put this year's total crush at below last season's 1.6m tonnes, but Mr Stanford said last year's result ended up much larger than expected, which could indicate that despite poor market prices more growers were persisting with winegrape production than previously thought.

With many vine ripped out or vineyards mothballed in a maintenance-only regime, or fruit left unpicked when no buyers could be found, the national crush has shrunk about 250,000 tonnes in the past five years.

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