Aussie wine going places

Britain's Prince Charles sampling a red wine at Tanunda in the Barossa Valley area of Australia during his visit early this month. Since 1996, the amount of Australian land used for vineyards has more than doubled.
Britain's Prince Charles sampling a red wine at Tanunda in the Barossa Valley area of Australia during his visit early this month. Since 1996, the amount of Australian land used for vineyards has more than doubled.PHOTO: REUTERS

The turnaround has been largely credited to a growing fondness for it among Asian diners

For visitors to the numerous wine districts scattered across the Australian countryside, it can sometimes seem that every other farm either has a winery or is preparing to open one.

But the nation's enthusiasm for planting vineyards has brought mixed fortunes in recent years.

The first setback was a crippling decade-long drought from the early 2000s, followed by a strong dollar from 2006 which left winemakers struggling to sell offshore.

But the industry has finally begun to boom in the past year - and the turnaround has largely been credited to a growing fondness among Asian diners for a glass of Australian red or white.

For the first time, Asia has overtaken North America as Australia's top buyer of wine, with A$644 million (S$655 million) of sales in the past year - up 31 per cent from the previous year. Sales to China, the third biggest importer behind the United States and Britain, were worth A$313 million - up 47 per cent from last year.

A NEW IMAGE

Changing perceptions is a key task for Australian wine producers, and that is already happening.

MR MATT FOWLES, a Victorian winemaker

Wine Australia, the government body which promotes and researches the industry, this month outlined a promotion plan for Asia, noting a preference in some markets such as Singapore and Hong Kong for premium "food matching" wines. The plan said there were "plenty of opportunities" but suppliers need to consider the "different levels of maturity and accessibility". In China, for example, tastes are often "aspirational" and range from cheap to high-end.

"Japan, Hong Kong, Singapore, South Korea and Taiwan… have higher levels of wine consumption than other parts of Asia and this translates into greater understanding of wine and greater potential for genuine appreciation of Australia's fine wine offering," it said.

The rise in Australia's total wine exports last year - which grew 8 per cent to A$1.96 billion - was bolstered by the spike in sales to China, as well as free trade deals with Japan and South Korea.

A landmark free trade deal between Australia and China, signed in June, is due to kick in by the end of the year and analysts say it will further propel the sector, which already employs about 16,000 people.

One of Australia's biggest wine companies, Treasury Wine Estates, held the annual launch of its flagship Penfolds collection in Shanghai last month - the first time the event has been held outside Australia. Recent vintages of the collectible Penfolds Grange sell in Singapore for around $1,000 a bottle.

The company's managing director for Asia, Mr Robert Foye, has indicated the company could increase sales in China by at least 20 per cent a year over the next five years. "China is certainly our most important growth market," he told The Australian Financial Review.

Since 1996, the amount of Australian land used for vineyards has more than doubled and the number of winemakers has increased from 892 to about 2,400, with a total of about 5,900 grape growers. There are more than 60 designated wine regions across the country, including internationally renowned districts such as the Margaret River in Western Australia, the Barossa Valley in South Australia and the Hunter Valley in New South Wales.

But a rising Australian dollar, along with increasing competition from New Zealand, Europe and South America, left the industry struggling. Wine exports continually fell from 2008 until  July last year. Domestic sales have been relatively flat - a result blamed on high local taxes, lower overall alcohol consumption, and growing preferences for cider and other beverages.

As part of the recent export push, the sector has tried to change its image and shift away from an emphasis on cheaper, commercial products. Instead, the industry has begun to promote Australia as a "fine wine country".

"Changing perceptions is a key task for Australian wine producers, and that is already happening," a Victorian winemaker, Mr Matt Fowles, told ABC News.

The Chinese thirst for Australian wine has come as welcome relief for growers, though there are concerns about a slowdown in consumer spending as the Chinese economy slackens.

Australian winemakers are also facing a new threat - albeit something of a compliment - from Chinese counterfeiters. Australian authorities have warned of numerous fakes, including the Penfolds lookalike "Benfolds".

A version of this article appeared in the print edition of The Straits Times on November 28, 2015, with the headline 'Aussie wine going places'. Print Edition | Subscribe