Opportunity knocks for Argentinean and Chilean wine exports to China

[Mir Global Wine Corner Analysis] -- HKTDC article, "China's wine imports slowing."


China's wine imports are slowing reports HKTDC in this article. Wine imports increased a incredible 100% between 2006-2007 but slowed between 2008-2009, growing only 36%. None the less, total imports reached a impressive 6,389,439 cases, or 76,673,268 bottles of wine, making China the world's largest wine import market (once again according to this HKTDC article).

Despite the slow down, the macro picture of China's wine market is still overwhelming positive for wine exporters, especially for lower cost producers in the Southern Hemisphere.

The challenge for Argentinean and Chilean producers will be to figure out a way in which to take advantage of a more conservative and cost conscious Chinese consumer in the midst of the global economic downturn.

The HKTDC article, is of the opinion that the biggest winner from slowing wine imports will be China's domestic producers. While this may be partially true, Mir Global Marketing Co., attributes the rise in the consumption of domestically produced Chinese wine to other far more significant market factors.

1) The global slowdown has forced consumers around the world to cut back on luxury spending and to be more cost conscious. For the Chinese wine consumer who has yet to develop their wine pallet and is exploring wine for their first time, it makes sense they would economically rationalize to spend 20 rmb on a Chinese bottle versus 120 rmb on a French bottle.

2) Wine demand in China can partially be attributed to the symbolism behind wine. As the great American author Ernest Hemingway once said, "Wine is the most civilized thing in the world." If you are a Chinese consumer who has yet to develop your personal wine preferences and are trying to network in the business or political world where it is a good thing to appear "sophisticated," you might be able to accomplish this with a Chinese bottle of wine. So, why invest in a expensive French or Italian bottle of wine?

Although, if a lower-middle class university student was about to meet with the head of Google's Recruiting Office in Beijing, and had never tasted wine in his/her life, I think it would justify dipping into your savings for a French bottle of wine. But, if you're simply going out for a nice drink with some friends on a Friday night to the Beijing's bar district, splitting a bottle of French wine when you don't know what you're tasting will not be a common site.

To further explain:

A considerable amount of wine demand in China is generated from a new elite class of consumers with considerable spending power who can afford expensive wines and liquors. This includes, the rising class of sophisticated, metropolitan consumers in cities like Beijing, Shanghai and Guangzhou. Businessmen and women. Politicians. Wealthy university students. Chinese who have lived abroad. And of course, foreigners living or visiting China.

However, the majority of China's new wine consumers can not afford to indulge in relatively expensive bottles of wine, especially in times of economic uncertainty. What is more likely to occur is the new middle class consumers in 2nd and 3rd tier Chinese cities like Harbin, Dalian, Suzhou, Chongqing, Kunming, Taiyuan, etc will attempt to emulate (the best they can) China's new class of rising elites.

This has been the case in societies around the world since the dawn of civilization.

The main difficulty for Argentine and Chilean producers at the moment is convincing the very brand conscious Chinese to trust the quality of their products. France remains synonymous with quality when it comes to wine, while wines from Italy, Australia and Chile have had to struggle for years to build a trusting image with Chinese consumers.

Opportunity has come knocking at the door. Before you answer, just make sure you and your company are ready.

Bennett Reiss - International Trade Consultant at Mir Global Marketing Co.

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China's Wine Imports Slowing -- HKTDC

"China has always been the biggest market of wine imports globally. However, the situation is changing. With the rise of China's domestic wine production, China's import of wine is on a downward turn.

After world renowned brands Hennessy, Remy Martin and Martell, Courvoisier's Napoleon wine, one the four top-class brands of wine in the world has announced its formal entry into the Chinese market. Not long ago, Hennessy announced the debut of its Iridescence, a world classic type X.O. on the China market, alleging that China was its biggest consumption market for the first time.

Although various brands of imported wine products have poured into China's market, the import growth has slowed down. According to statistics from the customs, China's import of packed wine of less than two litres slowed down its growth last year, and the import of wine in packaging of more than two litres has stayed at the same level for three successive years. After hefty rises of about 100% in the 2006-2007 period, China's import of wine was 6,389,439 cases of packages of less than two litres (nine litres per case), rising 36% year on year.

The increase of raw materials for wine production has weakened China's dependence on import. With the expansion of planting areas for grapes, the raw materials for wine production have increased gradually. However, with increasing expansion of China's wine market, there will be more and more foreign brands of wine entering the China market, indicating more fierce competition for China's wine- making industry in the coming years. "

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2009 Southern Hemisphere Wine Harvests -- Chile, Argentina, South Africa, Australia, New Zealand

The results are out, the reviews have been written, and now its time to sample the 2009 wine harvest. At lease this is the case for producers in the Southern Hemisphere of the world.

As producers in North America and Europe watch their grapes ripen, vintners in Argentina, Chile, South Africa, Australia, and New Zealand are preparing to sample their first bottles of 2009.

A healthy growing season is paramount in the process of ultimately producing a quality wine. This is of course why certain regions in the world excel in wine making. These regions are blessed with extremely conducive climates for growing grapes used in wine making. This is why regions like Mendoza, Argentina have historically been known to consistently produce high quality wines. Click here to read more about the region of Mendoza from Mir Global Marketing's home page)

This article from the Winespectator.com provides links to the publications reports on how the 2009 grapes have turned out in Chile, Argentina, South Africa, Australia and New Zealand.

Argentina: Heat spike hurts Argentine white wines, but reds weather the warmth

Chile: A warm and dry year leads to ripe wines and slightly higher yields

South Africa: South Africa's wine regions enjoy a cool, dry season, producing quality across the board

Australia: Yields are down in most regions, but a cool, dry season may have produced elegant reds

New Zealand: A moderate growing season bodes well for the country's reds and whites


To access complete country harvest and grape reports from the Winespectator.com, please click on each respective country link

Winemakers turning to Asia to help ride out economic slowdown

WA winemakers look to Asia to beat industry downturn
By Georgia Loney of The West Australia


WA winemakers are turning to emerging markets in Taiwan, Nepal and South Korea to help the industry through the global economic crisis, as traditional markets in Britain and the US dry up.

Major wine importers from Japan, Nepal, South Korea, Sri Lanka, Taiwan and Thailand toured WA wine regions this week in search of supplies.

The value of Asian markets is rising rapidly, with China and Taiwan buying 54 per cent and 23 per cent more of Australian wine over the past year, while the volume of exports to Nepal is up 97 per cent.

Taiwanese wine importers Shelly Wu and Winston Lin signed a deal last month to import Cullen Wines from Margaret River and said there was a strong market for Australian fine wine in Taiwan but it was overwhelmingly for red varieties. Ms Wu said WA shiraz was popular. “The market for (fine wine) has been developed over the last 20 years but they mostly used to drink French wines. Now there is stronger interest in new world wines,” she said.

“There is strong interest in shiraz from Australia and the cabernet sauvignon is beautiful compared to the European style. We are adding to our portfolio of WA wines because the wine style is very elegant and very approachable to the Taiwanese palate.”

Nepalese wine buyer Amit Agrawal imports wine from the Hunter Valley in NSW and is yet to buy any WA wine.

He said the tiny country’s thriving tourism industry generated demand for fine wine. “Because we like spicy types of food, sauvignon blanc goes well,” he said.

Britain and the US remain by far the biggest wine export markets but their value has fallen 20 per cent and 12 per cent respectively over the past year.

Australian Wine and Food festival in Vietnam

The second Australian Wine and Food festival, with over 150 kinds of wine and dishes of Australia, will open in late May in the New World Saigon Hotel.

“We want to prove that Vietnam is a country where tea, beer and whiskey are popular. This event is a chance to popularize Australia to South East Asia”, said Jim Cawood, chief executive officer of Vino Vietnam, the Australian wine importer and distributor and the host of the event.

The festival will have the participation of numerous restaurants in Ho Chi Minh City.

Australian well-known chef, Paul McMahon, from Catalina Restaurant Rose Bay in Sydney will make a perfect menu for lunch and dinner for the whole week, in which Australian food matches the correct wine.

In addition to the two day festival, held by the Australian General Consul and co-sponsored by ANZ, Jetstar, New World Hotel Saigon, RED and the World Magazine, the first Australian Wine Competition will be on May 28th, aiming to name the best Australian wine on the market.

The winning wine will be served at the Gala Evening scheduled for the following day.

[Article Source] -- HNM

Translated by Mai Huong

Affordable, Franzia box wine flying off the shelves!

With the global economic crisis in full swing liquor stores and wine bars are seeing their older, high-priced wines gather dust.

Bronco Wine Co. in Ceres, Stanislaus County produces more than just box wine like Franzia. The group is also behind other affordable brands such as Charles Shaw, Crane Lake and Napa Ridge.


Year to date, Bronco's Wine sales are up 25% on volume. Charles Shaw alone is currently selling about 6 million cases a year. The company has aspirations of eventually moving 100 million cases a year.

Where do they expect to find the bulk of their buyers? You guessed it, China.

Next month, the plan is to unveil a new Australian Chardonnay by the name of "Down Under." It will sell for half the price of Yellow Tale, currently one of the most consumed, affordable, white wine around the world.

Fred Franzia, who sold his brand to Bronco wines, had the following words to offer to offer the SF Chronicle, in this article.

"His only worry seems to be that he might run out of wine - even though he controls reportedly 40,000 acres and buys far more in bulk. "We'll probably have to allocate. Imagine that."

This is the year, after all, when cult-wine allocations are being busted, when retailers can cherry-pick the finest wines. And yet many wineries still won't flinch on pricing. Suddenly, Franzia's crusade against high prices - he still believes no wine should cost more than 10 bucks - has an eerie resonance.


Mir Global Wine Corner Analysis

It does not take a genious to figure out Franzia's market strategy, especially when it comes to China. In general, Franzia hopes to capitalize on the rising consumption of wine in markets like the United States, China and Russia by tempting people who like to drink with cheap prices and wine that doesn't taste like rubbing alcohol.

Franzia box wine and Charles Shaw do taste better than the majority of Chinese wines I sampled in the past. That does not however mean that they are by any means... good.

In the United States where a great variety quality wines from Chile, Argentina and Australia are widely Franzia will get lucky if this recession forces consumers to substitute slightly higher priced, quality wines from these countries for their poor alternative.

If Franzia is able to slightly improve its quality and hook consumers however, I can see their strategy working out to a certain extent.

As for China. This is great news for companies like my own Mir Global Marketing Co., which specialize in South American wines.

If Franzia goes through the trouble to promote their cheap products in China and are able to successfully get the Chinese consumers buying cheap, lower quality Chinese wines to switch to their wines, they will be doing South American wines a great favor.

One of the main difficulties for Argentine producers at the moment is convincing the very brand conscious Chinese to trust the quality of their products. France remains synonymous with quality when it comes to wine, while wines from Italy, Australia and Chile had to struggle for years to build a trusting image with Chinese consumers.

Franzia already has a decent customer base in China where wines are outrageously over-priced. Although something just does not sit well with me when you must pay $6-8 for a glass of Franzia.

What if there was a Chardonnay from Argentina listed on a menu just Franzia's selection?

If Franzia's marketing and promotion of their own wines have worked, this will inevitably mean the Chinese consumer has become more educated about wines and that his/her tastes have evolved.

I have a feeling, after drinking a few glasses of Franzia, the sophisticated wine drinker in China will decide to spend a few extra RMB for a much higher quality glass of wine.

So let me say the following:

"Thank you Franzia."



Bennett Reiss - International Trade Consultant at Mir Global Marketing Co.

Australian wine export data sheds some light on the industry

An Australian Wine and Brandy Corporation report released this weekend states the value of Australian wine exports declined 14% in the year ending April 2009.

The report highlights that despite overall pressure from the global financial crisis, which has strained many traditional export markets, growth in Asian markets remains robust.

The report says that more than half of the industries export decline originated from the United Kingdom. Export growth came from Hong Kong, China and Japan. China recorded the largest growth in value, with a increase of $30 million.

Another trend also highlighted in the report was a move towards lower-prices bulk wine shipments. It seems the greater market is cutting back on higher end wines in exchange for "bang for your buck."

Good news for South American and other low cost producers making quality wine which tend to struggle to break into Asian markets where consumers are VERY brand consciousness and prefer French, Italian and more recently Australian and Californian wines.

Data snips accessed from this ABC-Australia article

The Global Wine Market

Wine & Drinks Business Review - The world's wine market- an evolving panorama

A consistent theme of this site will be discussion about the ever evolving state of global wine markets. MIR Global decided to start this site as a resource for people to come not only to keep current on major news/development in the wine scene but also to discuss the ever changing nature of it.

First lets talk about supply. During the past decade wine production has exploded in many new countries. Wines from the United States, Chile, Argentina, South Africa, Australia and New Zealand have become household names around the world. Europe is not the only kid on the block anymore.

Now, consider the demand side of things. China, South-East Asia, India and Russia have suddenly emerged as the future major wine markets. With incredibly large populations, robust economic growth and a ever more interconnected global economy wine producers have switched their focus to Asia.

Described in this article from the Wine & Drinks Business Review

Countries, such as China, India and Indonesia, will compensate for the stagnation of Western economies.

The companies with strong international orientation will benefit from the demand coming from Asia, which will balance the markets that are more inclined to a stability situation, such as the Northern-American and the European ones.

Some facts from the same article

* European wine production falls to 161.6 million hl versus 163.6 million hl in 2007

* French production falls to 41.4 million in 2008 from 46 million in 2007.

* Argentina is decreasing to production to 14.6 million hl

* Chile's production grows to 8.6 million hl in 2008, not sure what it was in 2007, article doesn't say and a google search did not yield immediate results. If anyone knows please share.

* South African wine production increased 5% to 10.2 million hl.

* Australia's production grew a pretty stunning 30% to 12.3 million hl.

* New Zealand finishes off the count, growing a astounding 39% to 2 million hl.

Now in terms of exports from some traditional European markets, decline where seen across the board, with Italy taking the biggest hit proportionately.

* Italian exports fell to 17.8 million hl, which breaks down in layman terms to loosing about 7% of the share of Europe's exports.

* Spanish exports on the other hand gained 8.5% of the European export market of fine wines, exporting 16.9 million hl.

* US exports rose over the threshold of one billion dollar sales (+6%), with a volume of 4.9 million hl (+8%), of which 90% came from California.

* France had a 10.5% fall in the volumes, at 13.7 million hl.

* Australia showed a decrease of 11% at a little less than 7 million hl.

Click here to access the full article: "The world's wine market- an evolving panorama."

Courtesy of [wine.drinks-business-review.com]

Hong Kong quickly growing into global wine hub

Hong Kong is on track to become the premier wine hub of the Asia-Pacific region, thanks in large to the elimination of import duties last February, 2008.

The Special Administrative Regional Government of Hong Kong decided to do abolish the duty in hopes of encouraging wine imports and creating jobs in sales, marketing, storage and logistics.

Singapore which can be argued currently holds the title as Asia's wine hub is going to have to adapt to the arrival of new comer, Hong Kong, which has aspirations develop its own capacity to serve countries throughout the region, including countries in SE Asia which Singapore currently serves.

Since abolishing the duty, U.S Department of Commerce figures show that wine exports from the U.S alone rose by more than 500% year-on-year (Feb 2008-09).

Global wine imports reached $370 million in 2008, also clocking in impressive year-on-year growth of nearly 80%.

"Hong Kong has been a top three export market for U.S. wines ever since," California Wine Institute regional director for emerging markets Eric Pope said while speaking during an event held at the Culinary Institute of America in Napa Valley where John Tsang, Financial Secretary for Hong Kong's Regional Government had gone to promote Hong Kong as a wine market hub.

He added that their vision was to make Hong Kong the platform for getting wine into other regions and for promoting wine market growth throughout Asia (click here to access a great article on this topic from the Indian Wine Academy).


It is clear global trade patterns in the wine industry have changed dramatically over the past few years. The simple scratching of duties in Hong Kong alone has had a dramatic effect on the wine markets in Asia. As India and China work to develop their own wine industries, as more places like Hong Kong open up to making trade easier and as the United States, Australia and New Zealand work to increase their market share--wine markets will again change quite dramatically.

As professionals in the industry it is up to us to keep up to date with the changes that and to constantly adapt our business plans and marketing strategies to cater to the ever changing tastes of consumers around the world.

Wine markets in Southeast Asia

Southeast Asia is home to many consumers with rising levels of income. When income rises and a given society modernizes or evolves so do its tastes and preferences.

This is currently going on in the greater Asia region as we speak. Add the extra element of a ever more interconnected global economy and the pace of change is truly incredible.

Singapore, Malaysia, Thailand and Vietnam have a combined population of roughly 180 million people. These countries represent a diverse mix of different elasticities, levels of development and traditions.


Malaysia -- For instance the majority of Malaysians are Muslims who in accordance with their religious practices do not drink any alcohol. However even in this context a great potential wine market exists.

For starters Malaysia is home to about 28 million people, of which 2/3 are Muslim and therefore do not drink alcohol. The remaining 1/3 still presents a sizable market of about 8-9 million people, greater than the combined markets of Singapore and Hong Kong, two already very developed wine markets.

Second, ethnic Chinese in Malaysia are unarguably one of the wealthier segments of Malay society and are also coincidentally the largest consumers of wine in Malaysia. As members of the upper-echelons of society they unknowingly serve as status symbols for people to emulate as they aspire to move up the social latter.

This great article I have just stumbled upon at the China Wines Information Website, shares some good statistics.

Singapore -- Wine market breaks down as follows: 10% sparking wine, 65% red wine, 25% white.

Thailand -- According to the New Zealand government which published these statistics, consumers in Thailand lack detailed knowledge about wines and have a unfounded, preconceived notion that the only "real" wine is red wine. At the moment wine makes up about 20% of the alcohol consumed in Thailand every year. About 83% of the wine consumed in red. A major challenge for those trying to break into the Thai market will be educating the consumer about white wines, which in many instances would accompany Thai foods better than red wines.

Vietnam -- Most Vietnamese do not drink grape wines because they have yet to acquire a taste for it. Wine is a relatively new product to the average Vietnamese person. Therefore most wine demand within Vietnam comes from expatriates, tourists and a few Vietnamese of the upper classes who have acquired a taste for it.

The importance of using Singapore as a hub for serving all these wine markets is highlighted in this article from New Zealand.

"It is important for New Zealand wine exporters to consider leveraging on Singapore's position as a regional distribution hub for wines by developing partnerships with distributors who have strong regional distribution networks."