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Australia’s wine exports to China

Australia’s wine exports to China
by Shen Gang

Over the last decade there's been a marketing battle in progress to persuade us tea-revering Chinese that we should adopt new drinking habits, like coffee and wine. Australia has recently joined the battle. The growing pains for Australian wines in the Chinese market may result from two cultural disadvantages. They lack a romantic gene, as French wine does, and have little historical glory as tea owns from helping the USA in War of Independence and trading for India’s freedom from Britain hands. Therefore instead of celebrating its new arrival status, Australian wines will succeed if they can establish a new cultural niche for themselves.

Foreign wines started the market campaign in 1999, when several French vineyards held wine tastings in big Chinese cities, such as Beijing and Shanghai. Australia, however, signed two memoranda of understandings (MOU) on April 17 to improve local wine access to markets in China, including Hong Kong. Agriculture Minister Tony Burke said, “In a country the size of China, a single window to government will make it easier for the Australian Wine and Brandy Corporation to help exporters ship wine to this important market.”

By playing on the luxury cachet of champagne, their historic association with fine wine production and the romanticism of Paris, French wine marketers conquered most celebratory dinner tables and established a strong notion in many Chinese minds - that French wines are the best. Now, French wines top the list of imported wines in China.

As for newly arrived Australian wine exporters, there are some additional complicating factors, according to Richard Owen, Asia Pacific Export Manager of Casella Wines. Casella, known for its Yellowtail brand, is one of the biggest winemakers in Australia. But the culture gap remains the biggest obstacle to the voyage of Australia wines to China.

“Chinese market is a difficult one to deal with. To be frank Chinese consumers has very limited knowledge about wines. And, there are so many alternatives to wine. You can drink teas, Chinese rice wine, spirit, and even whiskey, such as Johnny Walker or just beer. Chinese people take the face issue seriously, if they don’t know much about wine, why should they lose face to choose a wrong one,” Mr Owen said.

“There are 1.3 billion Chinese. How can you educate 1.3 billion people and change their drinking culture? It is a mission impossible,” Mr. Owen said.

As a newly converted wine lover and a Chinese, I experienced such difficulty rooted in culture – first and foremost were the names. It is very much like dating. How can you start a relationship with a girl without even knowing her name? Cabernet Sauvignon, Pinot Noir, Syrah or Shiraz – they are not even English names! Oh, my God, should I learn another foreign language before I start to enjoy wines? Different from dating, certainly you can enjoy the nose, the lip, and even the legs of a glass of wine. (It sounds nasty, but it is the French way to describe the smell, color and tissue of wine.) Names, forget about names. Who cares!

Since French wines have some advantages in the competition, from this perspective Australian wines are not only fighting to establish their quality but also their identity in the Chinese market. To acculturate middle class Chinese to wine drinking may, in my opinion, make the cake of Chinese wine market bigger, and in return Australia wines may create a larger share instead of cutting a niche part from other competitors.

Go straight to enjoy it, is the strategy taken by Casella Wines in the Chinese market, according to Mr. Owen. The Australia brewer even has a Chinese slogan – You ni zuo zhu – which means the right is in your hands.

“To my point of view, Chinese people can enjoy wine in the ways they’d like to. If they like to drink it with some sugar, or mix with sprit or Coca Cola, just go ahead, as long as they drink wines,” Mr. Owen said.

In order to win the hearts of Chinese, Australian wines need to find a Chinese ally. Chinese food, though not made to match Western alcohol, might be a perfect partner. I noticed that in the Chinese media there are already some restaurants and food critics starting to work as matchmakers for wines and Chinese dishes. I think the successful marriage of Australian wine and Chinese food will definitely open Chinese wallets to wine-makers.

Australians might also get some ideas from Starbucks’ coffee marketing. In 1999, when Starbucks started with its first outlet in Beijing, the company was not confident enough in the new market. However, as well as just providing a new beverage to Chinese consumers, the company decorated its outlets in a comfortable and westernized style where young Chinese who admire the Western style of living can fulfil their dreams at the cost of a cup of coffee. When entering a new market, Starbucks always cooperate with local partners; as a result, Starbucks now has over 300 outlets in 26 Chinese cities, and still expanding its territory.

Perhaps Mr. Owen was too conservative and less confidant about Australia wines. According to the ministry of Agriculture, in the twelve months to March 2009, Australian wine exports to China have totalled A$81.2 million. China has become Australia's largest Asian wine market: in 2007, Australia sold 1 million cases of wine to China and the number jumped to 1.3 million in 2008. Be confidant in the yellow kangaroo, Aussies. It may jump further and higher in China.


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No point in wining about the possibility of failure

It would seem that Australian companies have an easier road then previous international wine companies as a market niche has previously been opened up. It is only a matter of time until Australian wines are served in greater numbers and splashed across various tables and bars.

Traditional wine lovers will be shouting “no” in shock at the prospect of adding sugar or another foreign ingredient usually not found in wine.

The key to success of Australian wine sales in the short and long term lies with the younger generations of Chinese and expats living in specific areas of China.

Would you agree, Shen Gang? It makes sense when Shen Gang and Alex Vitlin say a marriage between food and wine is one way to gain sales in China after all it has worked elsewhere before and China would be no different.

I also agree with the view that Mr Owen believes that Australian wines will find the challenge difficult especially in reference to his suggestion that it does not matter if they “drink it with sugar or coke as long as they drink it” remark.

Wine appreciation

I agree with you, Gang. I think that Australian wine exporters will need to find a cultural niche to tap into the Chinese market. I think that pairing Australian wines with Chinese food would be a great way to get a foot in the door for Australian marketers, but you also quote Mr. Owen as saying, "if they don’t know much about wine, why should they lose face to choose a wrong one," which raises a good point.

Perhaps a good way to pair Chinese food with Australian wines, whilst also allowing Chinese people to become more confident about wines, may be to promote wine tasting and appreciation courses in China, such as the National Wine Centre of Australia course. These courses could teach Chinese people to understand the different types of wine, whilst also explaining which wines match which meals. 

A new combination

With regard to the difficulty of establishing Australia as a regarded wine producer within China, there seems to be a number of domestic issues the local Australian industry needs to sort out first.

One is perhaps intractable: while state governments in NSW, Victoria, SA and WA all strive to out-do each other, through arbitrary rankings accorded to wine shows and expos, it is unlikely they will be able to co-operate and present a coherent marketing strategy to international markets. The success Australian wine has had overseas has largely been single brands striking it lucky, as in the case of Yellowtail, Jacob's Creek and Penfolds.

You mentioned another issue: wine-food pairing. Given the majority of local wine sales occur in restaurants and bars, wine producers should be looking to how they can achieve wholesale distribution to China's hospitality industry. Perhaps the experience of restaurants here can help - I recently went to Spice Temple and was very impressed by the clever, succinct wine list that has been designed for its food.

Perhaps addressing these issues could make the process more successful?

It's only about time

Gang,  I want to partly disagree with you. Romanticism is just a hook that most people, I included; from diverse areas of the globe are stuck with because the French have been smart enough to instill it in us and make us believe in it. Every country has its uniqueness and marketing its products lies in the hands of its people. I have tasted wine from different countries. I bet winning the Chinese market is about the marketing strategy.

But on the culture note, I entirely agree with you. The culture gap is the worst enemy and obstacle to breaking a barrier to the market of the culturally-oriented Chinese populace.  But let’s wait and see; perhaps the tea-lovers are slowly but surely accommodating foreign cultures. I have been a guest at several Chinese occasions and have witnessed them enjoy and encourage us to taste their own wine. They were confident and yes, Aussies just have to increase confidence with their ‘yellow kangaroo.’ It’s all about time.

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