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Australian Vintage's Chinese export deal | John Lewis by 30/10/2017  

EASY DOES IT: CEO-chief winemaker Neil McGuigan says Chinese wine palates just starting to develop

AUSTRALIA’S wine exports for the 12 months to September 30, 2017, were up 13 per cent on 2016 and worth $A2.44 billion – of which $A853 million came from sales to mainland China, Hong Kong and Macau.

The figures, released last week by Wine Australia, the Federal Government statutory authority for wine, showed Greater China was our most valuable export market and had registered a 42 per cent increase during 2017. It dwarfed the value of our other four top markets, with the US yielding $A461 million, the UK $A349 million, Canada $A184 million and New Zealand $A75 million.

In volume terms, the UK was our biggest market with 28 per cent of the total, followed by the US with 23 per cent and mainland China with 17 per cent.

ASX-listed Australian Vintage (AVL), which was founded in the Hunter in 1992 by Brian McGuigan and has many Hunter shareholders, has responded to China’s burgeoning impact on Australian wine by making a placement worth $A16.5 million of 15 per cent of AVL’s existing capital (35,959,389 shares) to Vintage China Fund.

Vintage China director, Dixon Jiang Yuan has become an AVL director, joining existing board members Richard Davis, Neil McGuigan, Perry Gunner, Peter Perrin, John Davies and Naseema Sparks.

The deal provides an exclusive distribution agreement with Vintage China Fund for the supply of AVL wines to China and includes a partnership with China’s largest online wine retailer, YesMyWine.

AVL says it will use the $A16.5 million from the placement to drive the global growth of its core brands, reduce its cost base, drive greater efficiency and develop new export markets.

Previously AVL, the parent company of the Tempus Two, Nepenthe and McGuigan brands, had clinched a distribution agreement with COFCO, China's largest food processing, manufacturer and trader.

CEO-chief winemaker Neil McGuigan said AVL had sealed the deals by ensuring its wine looked and tasted appealing to Chinese consumers, but Australian wine producers seeking sales in China needed to understand that the Chinese wine palate was just starting to develop.

“Many Chinese consumers are still mixing wine with juice and soft drink, so you need to start gently,” he told The Weekly Times.

AVL’s Australian cellar doors were getting a lot of Chinese visitors, to whom the company aimed to give the best food and wine experiences, and it had two people who spoke Mandarin working in the Hunter Valley cellar door.