Future is in Chinese hands

Rabobank research food and agriculture general manager Tim Hunt analyses the Australian wine market.
Rabobank research food and agriculture general manager Tim Hunt analyses the Australian wine market.

THE future for Australian wine exports lies within the Chinese market, according to Rabobank’s research, food and agricultural general manager Tim Hunt.

Speaking at the SA Wine Grape Growers Summit in Tanunda on Friday, Mr Hunt said 22 per cent of Australia’s wine exports went to the Chinese market.

Chinese consumers had a tendency to prefer imported wines, which put Australia in a strong position going forward.

“Chinese wine companies struggle to make the margins they used to see a decade or so ago,” Mr Hunt said.

“It is a market we're very well placed to compete in; in the last five years imports into China have grown 10pc per annum in volume.”

While China is the biggest destination for Australian wine exports, it is closely followed by the United States, with 21pc, and the United Kingdom with 16pc.

Mr Hunt said Chinese consumers were developing a desire for the Australian culture and food and wine lifestyle, with 124,000 students studying in Australia in 2016 along with one million Chinese tourists visiting the country last year.

“These people are coming down, whether it is for a brief stay or multiple years, and seeing the lifestyles we lead, the environment, the food and the products we produce and develop a real appetite for that,” he said.

But other countries, such as the UK, have been more difficult to crack, according to Mr Hunt.

While the UK has reinstated its wine excise tax, Mr Hunt said exporters were yet to discover any implications of the change.

“The UK has increased its wine excise tax, which in the past has been associated with a decrease in wine consumption,” he said.

Mr Hunt said a plateau in wine consumption in the US was a challenge for exporters, but with the US dollar becoming stronger, it meant the price of wine was worth more to Australian exporters.

Joining the Q&A discussion at the summit, Seppeltsfield proprietor and managing director Warren Randall agreed with Rabobank’s predictions on Chinese exports.

He said the Chinese consumed about one litre of wine a year per capita, compared with Australians who consumed 11-12L per capita.

“We have a new market and it does want to consume wine and it loves Australia,” he said.

“I don’t think we really understand yet just how big China can be for us.”