Raise a glass to the cultural revolution

China is proving to be the great saviour of Australian wine. The Chinese are buying our wine lustily, and they’re buying up some of our wineries and vineyards. They’re taking the heat off the Australian wine sector in more ways than one.

The most impressive aspect is not so much the quantity of wine they’re importing, which has been growing at a rate of over 20 per cent a year in recent times, but the value of it. Our wine exports to China are not only the highest-value of all our markets, but the margin is considerable. China buys a much higher proportion of wine in the over-$10 a litre category than any other country. This is the highest price category recorded in Wine Australia’s statistics. China takes five times the volume of wine of this value than the UK, and nearly four times the US. What’s more, the volume of this type of wine shipped to China rose by 40 per cent in calendar year 2012 alone.

China is now our third-largest export wine market after the US and UK, nudging out Canada last year. Hongkong is our sixth biggest, which is significant because some of that wine enters China via Hongkong.

It’s great news for our winemakers, but the secret is well and truly out, and the number of wineries frantically trying to sell into China is making the market congested. Every wine producing country is in there. Aaron Brasher of Wine Australia estimates that of about 1400 Australian wineries that export, about 800 are into China.

Red wine dominates the market, partly because the Chinese like the colour red, which is associated with good luck, wealth and health. “Reds are driving the market,” says Brasher, “mainly shiraz and shiraz blends, but also cabernet sauvignon. Chardonnay is also high on the list.”

Jacob’s Creek is huge, while Penfolds is the number one premium Australian brand there, mainly because of its large portfolio of iconic reds. Penfolds’ chief winemaker Peter Gago, a regular visitor to China, speculates that new wine drinkers in China made the leap into red wine drinking without first discovering sweeter white wines, as most new drinkers do. “My theory is that the culture of tea-drinking, and the acceptance of tea tannins, was a lead-in to red wine drinking.”

Penfolds bucks the general trend somewhat, as cabernet and cabernet blends are leading the charge. Gago says China is mad about Penfolds’ iconic $200 Bin 707 Cabernet Sauvignon (tastings), and is the fastest market to sell out of Bin 707 each year. But Bin 407 cabernet sauvignon (tastings) and Bin 389 cabernet shiraz (tastings) are also big sellers. “And they’re not just buying it for gifts, or to put on their mantelpiece, they’re also drinking it – in a big way,” he adds. “Last November we did a launch of the Ampoule (12 sculptured vessels containing Penfolds red wine, which sold for $148,000 each) in Nanjing, and I thought ‘Wow!’ The cognoscenti there really drink red wine. And the level of understanding of wine is high and increasing annually.”

Gago is not too concerned about the crowding of the market. Yes, there are a lot of Chinese who still cannot afford to buy wine, but “There are also a lot of premium wine drinkers. They may be a tiny proportion of the population, but when you’ve got 1.3 billion people, you’ve got a lot who are drinking fine wine.”

He is also up-beat about the number of competitors. “I see it as increasing the offer. There are the small, medium and large wineries, the regional wines, the terroir wines. Exclusivity will be the next thing.”

France is far and away the biggest exporter to China. Australia is second. Actually, daylight is second, but Australia is next. This might surprise some people. But, according to Brasher and others close to the action, while Penfolds has an enormous reputation for red wine which has rubbed off on the country as a whole, other smaller wineries such as Torbreck, Leeuwin Estate, Voyager Estate and Petaluma have had a ‘foot in the door’ for many years, and are now reaping the rewards.

France will remain unassailable for the foreseeable future, because – at least for people new to wine – France is the country most closely aligned with wine in the public consciousness. “It’s part of the psyche,” says Gago. “Perfume has to be from Paris, etcetera. The French do luxury branding better than anyone. Just look at perfume, Champagne and Cognac. Luxury is not like a light bulb that you can turn on and off, it’s a 24/7, long-term thing. It takes a long time to build, and it will take a long time to change. And then there’s also the cringe factor.” Australians have to believe in their product and be confident their wines are as good as anyone’s.

Gago cites a couple of other examples of the importance of wine to the Chinese. At the biennial Bordeaux Vinexpo wine fair, in 2011 and 2009, up to half of the invited guests at his Penfolds stand were Chinese. It’s a gauge of their interest level. Another gauge is the number of visitors to the Penfolds Magill winery in Adelaide. “We hired Gigi, a fluent Mandarin-speaking woman, at our Magill cellar door sales. At first, we weren’t sure we had enough work for her. But now – we could have 10 of her.”

Chinese interests have bought into wineries and vineyards in Australia in recent years. Ferngrove in WA’s Frankland River region is Chinese owned, as are the Hunter Valley’s Capercaillie and Wynwood and Ross Estate in the Barossa – all owned by Winston Wine. More recently Gemtree of McLaren Vale has taken a Chinese investor on board. While there are so many vineyards and wineries looking for buyers, many of them doing it tough, and while Chinese businessman are cashed-up, we can expect to see more of this.

*Wine Australia, the wine industry’s promotional body, is active in wine education in China. It recently completed its first year of running it’s A+ wine schools throughout China. It has 17 educators on the ground, and 1500 people have gone through the schools. “We are about to start teaching Level 2,” says Aaron Brasher.

*Australia’s First Families of Wine, which all export to China, have determined that they will mount a major effort in China this year. The First Families are 12 family-owned wine companies, ranging from large wineries like Yalumba and Brown Brothers to the medium sized, including Tyrrell’s and D’Arenberg.

Australians are deeply involved in the inaugural China’s Wine List of the Year Awards, which opened for entries last week. It is a spin-off of Australia’s Wine List of the Year Awards, the successful national wine-list competition which has been run in this country for nearly 20 years by Sydney-based wholesale merchants Fine Wine Partners (and before that Tucker, Seabrook & Co). The competition was announced in China last September. Its prime mover, FWP chairman Robert Hirst, says the initiative was prompted by the “thirst for wine knowledge within China, on the part of both consumers and the trade”. A distinguished 26-member jury has been assembled, which includes Peter Forrestal, who chairs the Australian Wine List of the Year Awards, Sydney sommelier Franck Moreau (Asia/Oceania champion sommelier), Gerard Basset (world’s champion sommelier) and Brian Julyan, CEO of the Court of Master Sommeliers. The Court also works closely with FWP, operating its sommelier training and accreditation in Australia through FWP. It also runs China’s sommelier of the year competition. The jury for the wine list awards includes judges from China, the US and Europe as well as Australia. For judging purposes, China is divided into seven regions. Sommeliers enter by filling in an application form and submitting their wine list and menu at www.winelistoftheyear.cn. One, two and three-glasses ratings are awarded as well as special awards for 20 categories of restaurant. “The wine list is the face of the sommelier,” says China Sommelier of the Year 2012, Ying Guo, of the Four Seasons Hotel, Shanghai.

First published in Sydney Morning Herald, Good Food – 5 February 2013.

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