Saturday, 9 July 2011

Door opens to European wines

French champagne is all the vogue   Source: Supplied
AT a time when per capita beer consumption is at a 62-year low, Australian drinkers seem to be developing a taste for finer things, such as French champagne.

The currency boom that has devastated wine exports is a boon for adventurous drinkers, who are increasingly eschewing the domestic stuff for French and Italian wines previously denied to all but the well-heeled.
Over the past five years, wine imports have more than doubled from 26.1 million litres a year to 67.6 million litres, and now account for 15 per cent of sales, up from 3 per cent in 1996.
Many of the imports are from New Zealand, whose sales to Australia have more than tripled over the past five years to $259 million, due to the popularity of Marlborough sauvignon blanc -- a phenomenon local winemakers ruefully call the sauvalanche.
Grant Ramadge, head of Coles' liquor chain Vintage Cellars, said five of his six best-selling wines were from New Zealand, while in 2006 the top sellers were Australian.
But along with grassy whites from across the ditch, Australian drinkers are also discovering a taste for the Europeans.
French imports doubled to $130m over five years while Italian wine is up 58 per cent to $39.6m.
Excluding New Zealand wines, five of the 10 top-selling imported wines are French champagnes, with Moet non-vintage at the top of the heap, followed by Veuve Clicquot at No 2.
Steve Greentree, head of supermarket giant Woolworths' liquor division, said it was not just the currency that was driving the rise in imports.
"There's a desire to try something new and unique, there's a lot of interest in new varietals -- it's not just replacing Australian chardonnay with one from Burgundy," he said.
Meanwhile, Australia's wine exports have grown by less than 1 per cent in volume over the past five years and have fallen by 29 per cent in value, from $2.76 billion in 2005-06 to $1.96bn in the past financial year.
Both the surge in imports and the decline in exports are linked to the surging Australian dollar, which has made imported wine cheaper while also making it impossible for exporters to compete with cheaper producers in countries such as Chile.
The Aussie dollar has risen by 44 per cent against its US counterpart over the past five years, and by 65 per cent against the British pound. Little wonder, then, that Britain and the US, our biggest wine export markets, fell by 6 per cent and 19 per cent respectively in the past 12 months.
At the same time, the Aussie has also risen by 27 per cent against the euro, making wines from the world's oldest winemaking regions more accessible.
Thomas Lambert Laurent, chief executive of French winemaker M. Chapoutier, said his sales to Australia had risen by about 15 per cent for each of the past three years, due both to the dollar and the increasingly discerning palate of Aussie drinkers.
"Consumers are less afraid to drink wine from Italy and France with complicated labels. It's a very interesting time in Australia," he said from the Vinexpo wine conference in Bordeaux.
"Australians have been drinking wine for many years. The new generation is drinking more wine, and their palate is more educated and the taste profile is changing."
Wine consultant and writer Andrew Caillard from Woolworths wine auction business Langton's, said the oversupply problems that had dogged the Australian wine sector for years were also common in European markets, creating further opportunities to find bargain wines from old-world producers.
"Spain has been really struggling, so the market has created some downward pressure on prices, so we've been able to find some great wines from outstanding winemakers," he said after a buying trip to Europe. "Because we're buying these wines direct rather than through an importer, we make huge savings, so we not only pass those on to customers but we pass the benefit on to shareholders while maintaining a very healthy profit margin.
"The imported portfolio over the last two years has expanded hugely -- we've got more Spanish wines, more German wines, we're bringing in some really iconic names, and it's because Australian consumers are interested in it.
"That puts a bit of pressure on Australian producers, but if you're exporting you have to expect that some wine is going to come back the other way as well, and I don't think it's reasonable to expect Australian consumers to be drinking Australian wine every night."
With their market shrinking at home and abroad, Australian winemakers are looking to emulate the success of the resources sector and pitch their tent in China, the fastest growing wine market in the world.
In 2004, China bought less than $10m worth of Australian wine. In the past financial year, however, it took $156m worth of bottled wine and 24 million litres of bulk product, making China our fourth-largest export market.
It's also the fastest-growing, with bottled sales up 32 per cent by value over the past financial year at a time when sales of bottled wine to the US and Britain, our biggest customers, fell by 20 per cent and 33 per cent respectively.
"The Chinese are taking everything we can give them at every price point," De Bortoli Wines' European division general manager Francis Aguilar said.
But Australian winemakers aren't alone in targeting China, with the strongest competition coming from the country whose British market we stole in the 1990s -- France.
French wine has the biggest share of the Chinese import market, with 48 per cent -- more than double Australia's share, which sits at No 2 on 21 per cent.
Professor Tommy Lam, director of Jiao Tung university's wine department in Shanghai, said France established itself in China before other producers, but had appealed to the growing Chinese middle-class desire for prestige.
"France is popular because it was the first into China and people consider it to be the luxury category of wine," he said.
This has created a boom in demand for wines from Bordeaux, France's most expensive region, and driven the price of famous wines such as Chateau Lafite through the roof, with a buyer in Hong Kong last year paying $US230,000 for a bottle of the 1869 vintage.
Australian winemakers shouldn't try to compete by emulating the French, but should concentrate on wines with regional character. "Australia has great potential in the Chinese market, but they're always competing at the middle and lower level because they don't have that icon status," he said.
"But that's OK because in every market there's a small group who will only focus on premium wine, and the rest are the mass market, so there are many points at which you can enter the market."
Prestige aside, Australia's heavier, fruit-driven wines have a natural advantage over their softer French competitors, he said.
"In Asia people drink a lot of spirits, so if they try a wine that is light on the nose they think it's not good quality," he said.
"If you are producing wine that the market will accept, and flavour is very important, then there is room for everyone.
"The Chinese are only drinking one litre each per year at the moment, when countries like Argentina drink 60 litres per year.
"There is room for every winemaking country to sell to China, at least for the next 20 or 30 years."
Key to Australia's success in the Chinese market would be a united marketing effort to establish Australia as a quality producer, he said.
"You need more wine events and exhibitions, but it's important for Australia to come as a brand.
"When it's just one winery among thousands they won't reach the market, you've got to push Brand Australia, so when people think of Australia they think of good wine, like they do with France."
Other so-called new-world producers are also looking to China as the next big market, with South African, Chilean and US producers having established a beachhead.
"We are all trying to figure out China and how to get this big country to share our passion for wine," Wines of Argentina Asia manager Ariel Menniti said. "One thing everyone seems to be doing is to match wines and Chinese food, and it's not surprising that everyone seems to think their wine is the perfect match."
This was illustrated starkly at the Vinexpo conference last month by a tasting session pairing Chinese foods with France's top-shelf sweet wines, sauternes.
"The great sauternes match very well with Chinese foods, especially Szechuanese food, but unfortunately they have been imprisoned as only a dessert wine. With spicy food it's wonderful because the spices enhance the freshness of the wines," Sauterne classified growths president Berenice Lurton-Thomas said.
Isobel Armstrong, Asia-Pacific business manager for South African producer Cape Legends, who has begun exporting to China, said the rapid growth of the market presented problems.
"In China it's a little difficult because everyone and his friend wants to sell wine and they believe there's a lot of potential, but it doesn't mean they will be the right people to sell your brand.
"The Chinese are a contradiction -- they want to get value for money and will bargain you down for a few percentage points just so they feel they've driven a bargain . . . but on the other hand they want the image and the prestige that goes with wine."
Ms Armstrong said she knew of a New Zealand producer who had a separate, inflated price list for Chinese customers because he knew they were prepared to pay more if they were able to get it reduced from the opening price.
Xiamen Fond Wine Import and Export general manager Floyd Wu said Australian producers needed to make more of an effort to educate Chinese consumers about their wines if they wanted to win them away from the French.
"There is very little information in China about wine, other than Bordeaux, which is very fashionable but too expensive for a lot of people."
Meanwhile, China is meeting much of the demand with its own plonk. Next year its wine production is expected to reach 128 million cases, ahead of Australia's expected 121 million.
Strong domestic demand might not be enough to prevent Chinese wine from competing for shelf space with Australian wine in US and British supermarkets in the near future.
But Bruno Paumard, a French winemaker working at Chinese winery Chateau Hansen in Inner Mongolia, said he was exporting "as little as possible".
"We have a really good market in China, and imported wine is quite expensive there due to tax and transport costs, which means we can also sell Chinese wine at these higher prices and make quite a profit with our wine.
"For exporting, we have to cut the price five times, and we only do it for the prestige."
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