Under Threat

Australian wine’s position in the Chinese market is in danger of slipping, as new on-premise figures reveal we’re still not where we should be.
by Trevor Gerzen

Data, as we now know, is king. Customers, we are told, can provide more value through the data they give us than through their purchases themselves. And China, we understand, remains a tough place to get wine data from.

Two Australians, Rob Hirst and Peter McAtamney, are doing their level best to change all that and provide real data concerning which wines are being listed and where. Furthermore, they reckon their data can track which distributors are performing and where, and what kind of mark-up is being applied by the restaurants themselves. How do they do this? By looking at their wine lists, of course!

Around a decade ago Rob Hirst, one of the most experienced operators in the sales and marketing of Australian wine and at that stage the Chairman of Fine Wine Partners, started to seek means by which he could help Australian wine gain a deeper footing in the China wine market. Having worked in education with both the Court of Master Sommeliers since 2008 and the Wine and Spirits Education Trust (WSET) since 2009, he has been deeply involved in their engagement in China, where his work has been strongly supported by government and industry.

“China recognises the importance of hospitality and tourism as a major employer and hospitality as a means to generate export revenue from tourism,” he says, “so there’s huge support for educational activities.” There are now more WSET students in China than anywhere else on earth.

Working with one of the region’s top educators, the Asia Wine Institute’s Tommy Lam, Rob Hirst first took his concept of Australia’s Wine List of the Year to China in 2012. It’s been held every year since, and Hirst says that the concept began to build significant data from 2013.

“Good data in China has been a nightmare to find,” says Hirst. “But we’re accumulating wine lists every year. The list is the face of the sommelier, and they’re keen to be recognised for what they are doing,” he says.

Hirst has been working for the last two years with Peter McAtamney from Wine Business Solutions to dig into what the data has to say, and their first Wine On-Premise China report has just been released.

The most obvious takeaway from this document is the chronic under-representation of Australian wine on Chinese wine lists relative to its overall market position. Second to France with 27.1% of imports by value, Australia has just 10.8% of wine listings in China. New Zealand, on the other hand, with a mere 1.1% of imports by value, has 6.4% of on-premise listings. And hitting Australia’s on-premise performance out of the park is Italy, with 17.9% of listings against a mere 6.3% of imports by value.

While Australia’s presence on Chinese wine lists outperforms its efforts in the UK (6% of listings) and the US (1% of listings), these figures suggest some repositioning of the Australian wine brand is necessary in what is still on track to become the world’s most important wine market. Take into account my estimate of 30-40% of all Australian wine sales into China being visa-driven OEM (or buyer’s own brand), and we’re still not where we should be.

Hirst senses the danger: “When Chinese people see more Italian wines listed in China than Australian, they will think they are better wines than ours and buy them instead. So, our number two position in this market is under threat since Italy has the listings we should have.”

Hirst is convinced the solution lies in education. “The sommeliers in China are very supportive of Australia. We have the quality and value they want, and they have the ability to see that. The trouble is that senior food and beverage people in China are very well travelled – they’re always on a plane to somewhere.

“We need to work together – with Wine Australia, WSET and the Master Sommeliers – to teach the Chinese trade buyers more about Australian wine. I firmly believe in the idea that if you help me with my career, you have won my heart.”

As far as I can see, that’s a sound interpretation of the data. In any country, let alone China where the situation changes more dramatically and more surprisingly than just about anywhere else, you need to keep an eye on the rear-view mirror. And right now, the view in that mirror has ‘Product of Italy’ written all over it.