In today’s talking points, the Australian wine industry is seeing accelerated growth in the Chinese market coupled by an increased demand for more exclusive wine. This is all supported by a $50M Australian grant for local Australian wine exports, a recent touring wine exhibition throughout China and the ongoing effects of the continued roll out of the China Australia Free Trade Agreement (ChAFTA).
Government Grant for Small and Medium Australian Wine Exporters
The Australian Government’s $50M Export and Regional Wine Support Package, largely aimed at increasing exports in both China and the USA, is in its third stage of the roll out. This involves providing grants to small and medium Australian wine producers to encourage exploration and development in the Chinese wine market.
The grant can be used to claim back 50% of travel related expenses used in the promotion of Australian wine. This has and continues to provide more remote Australian wineries the opportunity to explore an unfamiliar market with less direct financial burden. Additionally, the grant includes $350AUD per day for associated living expenses this trip would entail. The grant can be accessed until May 2020 (or earlier if funds available are already reached).
The final round of the grant will open July 1st, with the aim to increase wine tourism to Australia. Considering China has now replaced New Zealand as Australia’s greatest tourists, it is hoped that increase wine tourism to Australia will in turn increase Australian demanded wines back in China.
Source: Wine Australia
Australian Wine on Show at Australian Roadshow
The end of May saw a travelling exhibition of Australian wines throughout China; Tianjin, Hangzhou, Kunming and Shenzen. This Wine Australia event promoted the uniqueness of Australian wine and provided producers with strong leads and sales into the Chinese market. Wine Australia CEO Andreas Clark stressed the scale of this event; “We have a huge contingent of wineries taking part, with 53 of Australia’s 65 wine regions represented, and – in a first for the roadshow – we’ll be unveiling our new online Australian Wine Discovered education program in Simplified Chinese.”
This successful event involved wine tastings, networking, media and master classes. It strengthened the strong and growing relationship between Australian producers and Chinese buyers and formed crucial trade connections.
Source Wine Australia
Australian Wine Exports Expected to Increase Following Tariff Lift
Although ChAFTA was initially first implemented in 2015, only at the start of 2019 were Australian wine tariffs finally reduced to 0%. This is a substantial development, as currently French imported wine; i.e. China’s largest importer of wine, currently has a tariff of 14%. Subsequently, due to this cost reduction on Australian wine, it is expected that eventually Australian imports will surpass French imports to become China’s most demanded wine.
Source: The Drinks Business
Chinese Consumers are now Demanding Higher Quality Wine
The growing Australian wine market in China has been associated with an increased demand for higher quality wines. Chinese consumers are becoming more aware of the potential diversification of Australian wine and have a greater understanding of its uniqueness. Wine Intelligence commented, “Our data suggests that as consumers become more knowledgeable and engaged with this category, they are more selective about what they are going to drink.” This is corroborated with the fact that 28% of those who have bought wine online in the past 6 months spending 400RMB and above. This figure was at just 21% in 2016. Wine from Australia, and more notably, expensive wine, is being increasingly demanded by the Chinese market.
Source: China Wine and Spirit Award