Wine producers urge SA to make a deal with China

SA could be exporting more wine to China and make inroads into one of the fastest growing wine consuming countries, Perfect Wines of SA chairman Hein Koegelenberg said yesterday from Vinexpo, a wine exhibition in Hong Kong.

Koegelenberg is also CEO of La Motte and Leopard's Leap Vineyards. He has been in China marketing South African wine.

A Vinexpo global survey forecasts that growth in Asia will account for 53.7% of the rise in wine consumption worldwide between this year and 2015. China imports about 17,4 million 9-litre cases of wine which makes up about 15% of the total market. Of that, 15% SA contributed about 3%, Koegelenberg said.

France is the biggest exporter to China, making up 40% of the imported wine. Chile and New Zealand contribute about 8% each.

Chile and New Zealand paid 20% less tax for importing wine in terms of their agreements with China, Koegelenberg said.

A similar deal could help SA market wines more effectively.

A few producers had approached the government on the matter, but a year later nothing had come from it, said Koegelenberg. Department of Trade and Industry spokesman Sidwell Medupe advised wine producers to approach the department to assist in any trade discussions.

The financial crisis in Europe had created some instability in those markets and had caused many consumers to trade down. "It would become difficult to sustain business in those regions under those conditions and new markets need to be found," Koegelenberg said.

"There were a lot more South African exhibitors at the expo this year, which bodes well for South African wine," he said.

Another factor pushing local producers to consider China was that the Chinese were consuming more white wine, with consumption growing 45% over the past year.

SA's wine export volumes rose 21% in the first three months of the year, compared with the same period last year, Wines of SA (Wosa) said last month.

Wosa promotes South African wines abroad and has seen good growth from emerging markets.

Wosa spokesman Andre Morgenthal said the organisation would be attending about 20 international wine shows this year and about seven of these would be in China.

"It shows our commitment to Asia and an indication of how our focus has changed strategically," he said. "We have what they need. It is just a case of producers finding the right partners ... in China."

Morgenthal said the Chinese market was difficult because of language and cultural differences, but acknowledged that it was a potentially a lucrative destination.

Wosa also opened offices in the US earlier this year. "It is another big market which could be easier to tap into as they already have a wine drinking culture." SA used to export about 80% of its wine to the UK, this number has decreased to about 30% as new markets emerge, he said.

There were difficulties in doing business in China, Koegelenberg said. "South African producers have to be aware there are, for example, four ways to write Pinot Noir, so which do you choose for your label?" Local producers would also need to unlock the potential of online sales, as Chinese consumers bought about twice as much wine online as the US does online.

Source: Business Day