Since tariffs were lifted, China has fast returned as Australia’s most valuable export destination by both volume and value, helping Australian wine exports reach their highest levels since August 2021.
Despite this, Wine Australia’s Manager of Market Insights Peter Bailey warns that “export levels are not equivalent to retail figures” and that "these first months are likely to be characteristic of re-stocking Australian wine after a long absence.”
DMG Fine Wine Founder William Dong tells Drinks Trade the China market “is not picking up as quick as we want it to be.
“There's a lot more competition in the market, but I think that - especially in the last two or three months - we started to feel there's an uplift in the market … For the consumers, it takes a bit of time for them to consume the Australian product again.”
Similarly, Peter Bailey says “it will take time before it is evident how Chinese consumers are reacting to having Australian wine back in market.”
Declining consumption is the biggest reason for doubts around opportunity in China. Between 2021 and 2022, IWSR data revealed a -26% volume decline in total wine sales in China and predicted a continued CAGR decline of -2% up to 2027.
Another key factor behind the doubts is the evolving culture around wine consumption. This includes changing wine buyers, changing style preferences, and changing consumption occasions.
The majority of Chinese wine consumers are now female
Last year, Drinks Trade published this story outlining changing preferences towards lighter and more delicate wine styles. In it, Howard Park’s Richard Burch notes “strong interest in white wines/aromatic whites,” and Kilikanoon’s Travis Fuller notes a “fresh is best” mentality in which younger vintages are “more sought after.”
In a separate interview, DMG Fine Wine’s Chief China Representative Steven Greig told Drinks Trade that "the profile of the wine drinker is changing in China greatly," and that, since 2019, "we've seen a lot of young wine drinkers, especially young ladies out drinking Chardonnay, Riesling, white wines."
William Dong believes there is a direct link between the changing stylistic preferences and an increasing number of female wine buyers.
“In the past, I've been exporting wine to China and nobody asked for white wine. Then, in the last couple of months, I’ve heard people say they love Chardonnay, they love Sauvignon Blanc,” Dong told Drinks Trade.
“[Before], people didn’t know much about what they're drinking … but now the people are getting more educated/more sophisticated, and the majority of people who are making a purchase at the moment, they're women. I read the statistic the other day: 65% or 70% of people who are buying are ladies, not the men.”
According to Dong, this change has an influence on purchase for two reasons, being the difference in the buyers’ taste preferences and that they are purchasing the wine for themselves.
“Most of the ladies, they know what they love. Before, when the men were buying it, they would buy it for others. They buy it to put on the table with guests and things like that. When the women are buying, they're buying for themselves.”
In addition gender, demographic also stands as an important factor in understanding evolving consumption habits.
“Those 50-plus people, 55 or older, they are sticking; but the younger generation - like 30/40, especially the women - they love fresh, clean, fruity wine.
“They're drinking wine to appreciate, not to entertain, so I think the culture is changing a bit over there.”
Key considerations for lighter wine styles (and bubbles)
A key marketing opportunity for lighter wine styles in China is its suitability for pairing with Chinese food.
“I'm Chinese myself, and I love, everywhere you go, the different types of food … I think white wine will probably go better with Chinese food,” said Dong.
“White wine will definitely play a big role there. Maybe 30, 40%, 50%.”
Additionally, House of Arras - acquired by DMG Group in October 2023 - has also been attracting significant attention in China since the lifting of tariffs: “We're quite blessed and we're actually very surprised how popular House of Arras is,” said Dong.
This increased popularity was evident from the outset, with Steven Greig noting that, when at Vinexpo Asia 2024, many of the people he served had visited the trade show just to try House of Arras' wines.
Greig said, “It was interesting to see how many young people were lining up and said they came here because they knew House of Arras was coming, and they came here just for House of Arras. That surprised me because I thought there are so many big brands - I mean there's all the world's best wine brands here.”
At the moment, DMG Fine Wine is focusing on introducing House of Arras into the same environments where Champagne has proven successful.
“Because Champagne is going very well in China at the moment - especially in cities like Shanghai, Beijing, Shenzhen - in those cities, sparkling wine is actually very popular, like champagne … With House of Arras, we are pushing to hotels like Hilton Hotels and Four Seasons Hotel.”
While Dong says the introduction of House of Arras to China has been “going quite well,” he recognises that DMG Fine Wine’s portfolio is unique due to its premium nature.
“We're so boutique, if China starts to pick up on House of Arras, and Europe starts to pick up on House of Arras, then we will not have enough wine to sell for the domestic market. We'll be quite limited,” he said.
What about local competition?
In December, Treasury Wine Estates acquired a 75% equity stake in Chinese winery Stone & Moon which, once incorporated into its portfolio, will play a pivotal role in growing Penfolds’ country-of-origin program in China.
William Dong describes the decision as “quite smart,” saying DMG Fine Wine was once “very close” to making a similar acquisition.
“Almost 15 years ago, because we were doing a lot of tastings and events and we were pushing quite hard on Handpicked in China, we were kind of everywhere in China. At one stage, the Ningxia Government actually wanted us to set up something there.”
“[Also], during the pandemic, we got the opportunity to also make wine in China, too. But the thing is, we're different to Penfolds, because Penfolds is a very well-known brand already. People know that they're from Australia. They're a very established international brand, and if they make wine in California or they make wine in China, people go, okay, they produce wine from other regions. For us, we still try to establish ourselves in the market, and we just had a second thought as to whether we should make a move to making wine in China.”
Looking back, Dong also notes the challenging climatic pressures in northern China as a deterring factor.
“We’d been talking to [the Ningxia Government] for a number of years, but we just never made a move, because they have to cover their vines in winter,” he said.
“In winter, it's so cold they have to cover it with soil. Dig it, cover it, bury the vines, basically. And then in spring, they just bring it out … It's not very healthy for the vines: every year you have to stretch it that way. And also, it costs a lot more expensive in China, the land, the running costs.”
"In the future, if there's some great opportunity/if we can find a good partner or great site there, maybe we'll do something there ... I mean, who knows?"
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