Should we be Selling More Wine to the Chinese?

Hong Kong trade officials report that ZA is targeting the Hong Kong and China mainland markets for wine exports. We recently looked at this issue in the context of a possible trade war between the EU and China and the opportunities that might offer to our exporters. But should we not already be on the front foot in seeking to sell more wine to China? ZA Confidential sought the views of some of our experts….

Expert Comment:

Mike Ratcliffe from Warwick and Vilafonte Wine Estates:

I think China’s current solar panel and cellular electronics dispute with the EU could be opening doors for our wine, and perhaps cheese as well – the EU may see some of its products becoming not quite as popular. Our wines have done well in general around the world when there is a wine glut. We need to put a few more things into place such as a China-SA wine expo and perhaps a business-to-business chamber in the food industry. But already plenty of SA wines are doing well in China. We need to look at other industries with urgency now that gold and platinum are off the boil, and make use of the weaker rand. Wine is well placed, as are the tourism and food industries.

Dr Martyn Davies from Frontier Advisory:

China undoubtedly presents great opportunity for increased wine exports from SA. We’ve been rather slow to market ourselves consistently in China and have lost the early-mover advantage to our competitors, but I am nevertheless optimistic about the prospects for SA wine in China.

Jeremy Sampson of Interbrand Sampson:

Any effort to enter potential wine markets is to be welcomed. But is this too little, very late? And is it focussed on bulk wine – i.e. cheap and cheerful – or the branded, and, more profitable, end of the market? The Chinese wine market is all about red wine. Marketing campaigns come and go, but does SA have a physical presence in China, are partnerships in place, and so on – making it a sustainable exercise? As I recall, China’s main beer brand by volume is Snow, owned and managed for the last couple of decades by SAB. They understand that to succeed in new, especially emerging, markets you need partnerships. And it takes time.

Duane Newman from Cove Advisory:

The rand value of exports of wine and other alcohol products is on the increase. This will be due to increased marketing, and also the weakness of the rand. According to the South African Trade Statistics the exports of wine and related products increased by 54% from R446m in April 2012 to R688m in April 2013. This is an amazing rise, and I am sure some of this will be due to the increase of exports to the East, especially China. I do expect the exports of SA wine to increase even more with the focused marketing efforts of Wines of South Africa. With the drive to ban alcohol advertising in South Africa I am sure alcohol companies will have available budget to market to newer regions.

Independent Economist Ian Cruickshanks:

SA’s existing modest wine exports confirm the industry’s inability to form a co-ordinated marketing effort – rather than the current fragmented – mostly individual producers’ – foreign sales push. However, the expected record harvest, weak rand and rocketing Asian demand provide an opportunity which should benefit the domestic industry. A potential repeat of recent labour unrest and illegal arson in the vineyards renders reliable projections difficult, but the new basic wage agreement should contribute some industry stability. China’s estimated economic growth rate provides a huge marketing opportunity for SA wines for an industry initiative, which will also hopefully attract support from the Department of Trade and Industry.

Conclusion:

There are a lot of Chinese people, and the growing affluence of the Chinese does represent a massive opportunity for exporters of all sorts of South African goods and services. China welcomed us into the BRICS group of emerging nations. How better for them to toast our ever-closer friendship than with a few glasses of fine Cape wine?

Tweet of the Day:

Politics & Law (@PoliticsL): When they call the roll in the Senate, the senators do not know whether to answer ”present” or ”not guilty.” Theodore Roosevelt

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