Australian wineries wary of China's allure

Weakening demand for wine in China and an unusual import restriction have taught Australian wineries to tread cautiously in the country.

Many Australian winemakers still see China as a big opportunity to grow exports, but the past year has injected a greater sense of realism into their thinking.

Exports of Australian wine to China were down by 5% in the year to the end of September 2014 versus the same month of 2013, at 37m litres.

Higher priced wines suffered the most, according to the Moving Annual Total (MAT) figures released this week by the Australian Grape and Wine Authority (AGWA), also known as Wine Australia. There was a 16% drop in exports of wines priced above A$10-a-litre, to 4m litres.

Only wines exported at below $5 per litre saw higher shipments during the 12 months, echoing what many wine producing countries have experienced following the Chinese government's decision to curb spending by officials.

Earlier this year, some Australian wines were also caught out by China tightening its limit on manganese in imported wine from four milligrams per litre to two.

‘This is restricting the wines, particularly red wines, that can be exported to China from Australia,’ said Greg Howell, managing director of Australia-based Vintessential Laboratories. ‘We are testing lots of wines for manganese for our clients, and at last count over a quarter of these wines are over this limit,’ he told DecanterChina.com, adding he cannot think of a scientific basis for the Chinese limit.

Wine Australia's acting chief executive, Andreas Clark, said perspective is important. ‘China is not a panacea to the world's problems, but some people have done well there. It's a different market and we've got to do the legwork.’

China is still the third largest export market for Australian wine by volume and the second largest by value, behind the US.

Mark Saturno, of Longview Vineyard in Adelaide Hills, said that Asia as a whole is becoming the winery's most important export market, but that it has taken a cautious approach to the Chinese Mainland.

‘We have gingerly entered the China market, but we were very reluctant to go out there all guns blazing, because it's uncharted territory.

‘China has a long way to go to incorporate wine into people's lifestyles, but I think they are slowly coming around.’