July 2, 2010 / 6:51 AM / 9 years ago

NZ wine industry targets China for growth

WELLINGTON (Reuters Life!) - New Zealand wine makers are racing against rivals to stake a spot in what is set to be the world’s fastest growing market - China. The Chinese market for grape-based wines is currently small but expected to grow rapidly, fueled by the fast-growing middle-class and younger generations who are increasingly adopting western consumption habits.

Red wine varieties are the dominant import in China, but white wines, such as New Zealand’s noted Sauvignon Blanc, are picked to play an important part in the market as it develops.

Australian-based wine industry consultant Lawrie Stanford said China’s wine market is estimated to grow by around 30 percent over the next three years, and over the next decade it will be the fastest growing market in the world.

“Dedication to that market will yield benefits, without a doubt, but it will take time and it will take a lot of effort.”

Currently China consumes 0.7 liters of wine per person a year, against 20-25 liters in mature wine markets, Stanford said.

“France has been there for several decades and they have the drop on most other wine-producing nations,” he said.

The New Zealand industry has identified China, North America and northern Europe as the markets with the best opportunities, with the government last month promising to finance promotion and marketing for New Zealand wines in those regions.

New Zealand Winegrowers Chief Executive Philip Gregan said now is the time to look at getting established as the market is in a formative stage, warning every major exporter has their sights fixed on China.

“Consumers in China appear to be very reputation driven, so we have to make sure we have the right reputation in the market: it’s as simple as that,” Gregan said, adding New Zealand’s focus on producing high-quality wines fits well with consumers.

New Zealand wine sales to China for the year to July 2009 were worth just NZ$6 million out of a total NZ$1 billion ($694 million) in exports, of which around a third goes to the largest market, Australia.

However, China sales are expected to roughly triple in the July 2010 year and sales tipped to be in excess of NZ$50 million at the current rate of growth within five years, Gregan said.

New Zealand was the first developed economy to sign a free trade agreement with China, which is set to become an important advantage when wine exports to China become tariff-free in 2012.

One New Zealand winery already tapping into China is family-owned Mud House Wines, based in the South Island.

“We’re putting a lot of focus on China, it’s one of the key priorities for us,” said Chief Executive Baden Ngan Kee.

“It’s fair to say the wines that have resonated the most over there are Sauvignon Blanc and Pinot Noir, and that’s the New Zealand wine industry’s greatest strength.

“I don’t think there’s any quick wins in China. You’ve got to be patient. It’s a complex market and consumers are only just starting to understand wine.”

Reporting by Adrian Bathgate, Editing by Belinda Goldsmith

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