Can China’s middle classes save Aussie wine?

The impact of China’s austerity measures continue to hurt the Australian wine industry, but China’s middle classes are emerging as its potential saviour.

China has a role to play in the future of Margaret River’s Voyager Estate

Australia has been propped up by Chinese economy for years enjoying great economic success as a result, with the wine industry being no exception.

But recent austerity measures put in place by President Xi Jinping, focusing on reigning in corruption through “gift giving” has taken a massive toll.

According to Australia’s Special Broadcasting Service, Australian industry and Chinese government figures show millions of dollars have been wiped off the Australian import industry this year.

Now, having come to terms with the immediate effects, the Australian wine industry is focusing on the long term, and the Chinese middle classes.

Speaking to the SBS, Janine Carter, cellar door manager of the Margaret River winery Voyager Estate, says the region enjoys a lot of Asian custom but acknowledges there is more work to be done.

“China really is a slow burn, it’s going to be a long-term prospect, there needs to be a lot more education about wine, a lot more training, but what we’re finding is the Chinese are interested,”  she said.

“And so as they develop more of an interest in enjoying wine as a food and wine experience rather than just buying for gift giving or status then we’ll start seeing the wine sales start to pick up again.”

Voyager Estate is a relatively new player in the Chinese market but still saw a 15% drop in first quarter sales this year, partly as a result of the austerity measures, however Carter says it’s still a healthy market.

“Our distributors in China are actually very positive and they’re putting more people on the ground and investing into their team because they very firmly believe that the wine market in China has so much potential,” she said.

China National Day celebrations

Another Margaret River operation, Watershed Premium Wines, has a trading history with China going back more than a decade.

Watershed Managing Director Geoff Barrett has seen the impact of the austerity measures up close after one of his Chinese importers was stuck with a large volume of premium Australian wine when the measures took hold last year.

He said: “That importer had clearly made specific arrangements in China for the distribution of those wines and that arrangement fell over with the introduction of the austerity measures in China.”

“It’s my understanding that the chairman of the company is drinking his way through the Awakening range, which is the top end range, and the balance of the wine is sitting securely in a warehouse.”

Barrett sees the Chinese middle class as the future for Australian wine.

“There is certainly over the last 12-18 months, an increased level of inquiry at the mid-range, in terms of our ranges, and price points, and I find that most encouraging and a real trend is emerging,” he said.

But Singaporean wine journalist, Ch’ng Poh Tiong, suggests it may not be as easy to woo the Chinese as some might think adding: “It’s an utter fallacy to imagine that Chinese people like sweet wines, please don’t try and make a wine to suit the Chinese palette because there’s no such thing as a typical Chinese palette.”

Ch’ng Poh Tiong suggests regional marketing rather than individual branding might be the best way for Australian wines to distinguish themselves.

“You have to shout, sing the praises of the region, after that you have your own little tune about how great your winery is, so that needs addressing quite seriously,” he said.