It might be just a short distance to mainland China – the market turning the game for Australian wine – but Taiwan is an Asian destination in which Australia is steadily losing its share. Wine imports from Australia declined by 3% last financial year to about A$15 million, which now makes Taiwan roughly of equal importance to Belgium and Korea. Australia’s spot in the Taiwanese pecking order has slipped from 3rd to 6th – a constant, slow decline, seemingly the result of a loss of interest from Australia, rather than the Taiwanese. And it could easily dip further.
Taiwan is a very different marketplace for wine. First, it’s dominated by a BYO culture. According to locals, about 95% of wine bought off-premise eventually gets consumed on-premise. It’s not a culture that gets off on wine knowledge to the extent that they do in Hong Kong, Japan, or, to a lesser extent, Korea and Shanghai. Taiwan’s sommelier association has about 120 members, but only about 50 work professionally, as they get paid barely more than other bar staff. Yet despite this, and in the face of a strong emphasis on Australian entry-level on-premise brands, it remains our 10th most valuable market for wine with a Free on Board or Freight on Board (FOB) priced above $50 per litre.
That said, Taiwan remains an influential, affluent and significant market, which Australian wine needs to look at more carefully if it’s to avoid becoming too dependent on China. While Australia’s success there should be celebrated, over-dependence on a single market could lead to vulnerability, especially when our politicians seem ever more critical. You don’t need that much experience with China to know that if you want things changed, you do it behind closed doors, not through a megaphone.
Despite finding current conditions something of a challenge, the two largest Australian brand presences in Taiwan are Treasury Wine Estates (about 40% of Australian wine sales there) and Casella Family Brands (about 30%). In short, that largely comprises Penfolds and Yellow Tail, and the upper-end Penfolds wines probably account for the bulk of Australia’s surprisingly strong top-end sales. Given Taiwan’s cultural affiliations with the US, American wine has punched above its weight there relative to other Asian markets. Back in 2016, the US had nearly 11% of the market. In this geopolitical climate, I won’t even begin to start guessing in which direction that number is going…
According to Aping Wang, who manages wine sales for Pernod Ricard in China, Taiwanese wine consumers are becoming more interested in the variety or blend than just where a wine comes from. They’re keen to discover what’s unique about its taste.
Driven largely by an enthusiastic young, female market, wine consumption in Taiwan has risen steadily by about 8.5% over the past six to seven years and there is now a steadily increasing number of serious wine aficionados. Taiwanese wine drinkers are also accustomed to drinking wine around a meal, rather than substituting it for another kind of beverage in a drinking ritual ‒ another very positive sign.
It’s a market that is just becoming energised. While major chains such as Costco have dominated the retail market, they’re ceding ground to small, high-end merchants, as local imports of Grand Cru Classés (GCC) wines from Bordeaux pick up. Again, this is more evidence that Taiwanese will spend high on wine, given the incentive. There’s not a lot of wine coverage in the Taiwan media, so in the absence of a strong sommelier and on-trade culture, the most important influencers remain leading wine store owners and smaller importers who’ve sold the majority of GCC wines. Australia doesn’t have much of a voice there.
David Lucas, Wine Australia’s Regional General Manager for Greater China, says that unless Australia does something to reverse the slide in Taiwan, we’ll become irrelevant. It seems there’s every justification for Australian wine brand owners to engage further – to increase the breadth of the offering above entry level and support the narrative behind higher value wines.
For many reasons, Taiwan has been in the global focus of late. Despite the pace of political change, it remains a wine market in which Australia could have done better, to its own advantage.