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Chinese wine drinkers drive Australian export growth

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AN increase in the number of Chinese wine drinkers buying imported wine “off-premise” and consuming it at home is helping to drive the sale of Australian wine in China.

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A three-year study by the University of South Australia’s Ehrenberg-Bass Institute for Marketing Science funded by Wine Australia is nearing completion and has found the number of people buying imported wine in China and their frequency of consumption was on the rise.

Professor of Wine Marketing at Ehrenberg-Bass Larry Lockshin leads research into marketing related to consumer choice, packaging and retailing, and is an acknowledged specialist in all aspects of the Australian and global wine business.

He said the “surprising” growing off-premise trend represented an opportunity for the Australian wine industry.

“It was assumed when we started this project that on-premise, especially western restaurants in China, would be the driving force behind wine consumption but what we’ve seen over the survey is that more wine is being consumed off-premise, which means people are buying it online, in wine shops and to some degree grocery stores than the last few years,” Prof Lockshin said.

“People are moving from wine as purely a drink for formal occasions where eight or 10 people would share a bottle by having a “little teeny glass” each at a special occasion like a wedding or business function. Then the occasions started to become less formal.”

“That’s the part where the Australian wine industry needs to ask itself ‘what kind of retail channels are going to access that growing trend’.

Prof Lockshin said the opportunity was there but it’s not going to be a pot of gold without work.

“Build your brand, build it slowly, sustainably, know who you are selling to, pay attention to your labeling and pricing, spend some time to make it work,” he said.

South Australia is the biggest wine producing state in Australia, accounting for almost half of total production.

The Wine Australia Export Report December 2015 shows that the value of Australian wine exports jumped 14 per cent to $2.1 billion in 2015, reaching its highest growth in value since October 2007.

The strongest growth was in China, Australia’s third biggest export market behind the United States and United Kingdom, which grew 66 per cent to $370 million.

The University of South Australia study includes six surveys of Chinese buyers of imported wines conducted over the three-year span of the project.

The latest survey results – the fifth of the six – found 52 per cent said they drank wine at home for a relaxing drink once a week or more often, 46 per cent said they consumed wine once a week or more often with an informal meal at home, while more than half the people in the most recent survey drank wine at special occasions at least once every two months.

Postdoctoral Research Fellow in Wine Marketing at the University of South Australia Dr Justin Cohen, who has made several trips to China during the project, said wine had shifted from being just a special occasion experience to being a more everyday product.

“Frequency of consumption is rising rapidly for people consuming wine off-premise, even three years ago that wasn’t a major thing people were saying when asked why they were buying wine,” Dr Cohen said.

“One of the things that we’re starting to counsel wine brands about is if you make your product all about special occasions, that limits you entering the headspace of a potential consumer,” he said.  “But if you’re also saying ‘we’re an approachable product from Australia, we’re a clean, green, safe place with a great lifestyle’ then you’re probably more likely to enter the consideration set for purchase occasions that happen more frequently.”

Dr Cohen said Australian wine brands were doing a good job of educating people in China about their wine but they needed to shift their focus from the sommeliers and masters of wine to the uninitiated.

“If you look at our sample, which is people who are regular drinkers of imported wine, only two thirds of them actually know that Australia makes wine, 48 per cent of them know about the Barossa Valley, shiraz – our most iconic grape variety – is only known by 28 per cent of people who are regular drinkers of imported wine,” he said.

“I think one of the challenges is before we start getting into this whole idea of ‘what do we want to communicate about Australian wine’ we have to make sure that people have even heard of us – there’s people that don’t even know that we exist.

“France is dominant but probably the biggest surprise to most people is that the Chinese actually have a very large domestic industry – four out of five bottles of wine sold in China are in fact Chinese produced.

“Ultimately we are going to grow the Australian category in China by acquiring new wine drinkers and that’s probably going to start more at the entry level than at the very sophisticated knowledgeable level.”

The three-year project is in its final stages. A comprehensive report will be written for Wine Australia later this year.

This is a Creative Commons story from The Lead South Australia, a news service providing stories about innovation in South Australia. Please feel free to use the story in any form of media. The story sources are linked in with the copy and all contacts are willing to talk further about the story.

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