January 29, 2013 / 10:54 AM / 6 years ago

China's thirst for Australian wines golden: for now

SYDNEY (Reuters) - China’s growing thirst for Australian wines may be a golden ticket for now, but whether demand will last remains unknown even as vintages from Down Under gain new fans amid a surge of growth in broader Asia.

Australian bottled wine exports to China soared by 15 percent year on year in 2012, according to official data, bolstered by a sales push targeting the country’s wealthy drinkers and making Australia the top overseas market for wines priced at more than A$7.50 ($7.90) a liter.

Overall, exports gained 3 percent globally, with declines in bottled wine exports to some countries offset by increases in bulk wine sales.

“In South Australia, it’s going to be a fantastic year,” said Damian Torresan, a winemaker at Koppamura wines in South Australia. “China has been a bit of a golden ticket for a lot of places sitting on bulk wine for the last few years.”

Though China was by far ahead, bottled wine exports were good across the board in Asia, with those to Japan up by 11 percent, those to Hong Kong gaining 6 percent and exports to Thailand up 7 percent.

In many nations, the changes reflected an increase in wealth and status, with wine the means of showcasing both.

“In terms of Thailand, what we’re hearing is there’s an increase in wealth and increasing wine awareness so people are experimenting and buying more,” said Louisa Aherne, a spokeswoman for Wine Australia, a government agency that supports the wine sector.

“It’s a social status associated with drinking wine so it’s a similar story to that of China, to a lesser degree obviously.”

To a certain extent, the current success is due to luck. There has been good Australian production in the face of a poor U.S. season in 2011 and low volumes in Europe in 2012.

While growers were pleased with their gains, they remained wary, noting that while China is an area of massive potential growth, some of the gains may well have been due to short-term conditions.

“Absolutely celebrate all of the positives and hope that it does reflect the beginning of a substantial turnaround, but at the very least I think we could say a full industry turnaround is probably a couple of years away yet,” said Lawrie Stanford, executive director of Wine Grape Growers Australia.

A 2012 study by Australian Growers and Resources Economic suggests that in the next two years production-bearing areas will grow, potentially posing a different challenge.

“As an organisation we really do believe that we are capable of producing more than can be sold profitably - the positive signs at the minute are definitely higher prices but lower volumes,” he added.

One big advantage for Australia is that unlike many other wine growing regions in the world, growers there can plant new varieties in close proximity, enabling them to ride out problems that could hit one variety of grape.

“In Australia we’ve got a region like McLaren Vale where there’s Cabernet, Pinot, Shiraz, Chardonnay, Riesling,” said winemaker Torresan. “One hundred different varieties all within a 25 km aspect of the area with everyone having a real go as best they can.”

China’s vast population means there is plenty of market to share, Torresan added, but it’s still far too early to make any predictions for next year.

“Anything to do with growing - until it’s in the bottle, your money’s not in the bank.”

Reporting by Pauline Askin, editing by Elaine Lies and Paul Casciato

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