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e-China wine exports: Zero to hero in two decades

CNN by Amanda Sealy and Nosmot Gbadamosi13/12/2018  

As wages rise in China, so has spending on luxury goods. And wine is one of them.

Over the next four years, the economic giant is predicted to overtake France and the United Kingdom to become the world's second-largest market for wine, behind the United States.

Wine consumption in China is expected to rise by more than a third to $23 billion in 2021, when it will reach a volume of 192 million cases, according to Vinexpo. That's a growth rate of 30%.

Noticing this trend, Hein Koegelenberg, chairman at the South African wine producer L'Huguenot Vineyards, saw an opportunity. In 2013, together with Chinese distribution company Yangzhou Perfect China, the company created a range of wines specifically for the Chinese market. The result was Perfect Wines of South Africa and the brand now accounts for 25% of all South African wines sales in China.

Online sales potential

L'Huguenot Vineyards is 40 minutes from Cape Town, within the country's Paarl-Franschhoek Valley. And the company's move is indicative of efforts by South African growers to boost online exports by catering to the Chinese market.

"China are the leaders in e-commerce," says Koegelenberg. "I think of the foreign wines sold last year, 49% was sold through the internet," he adds.

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Koegelenberg agreed to sell its 100-ton wine cellar and 25 hectares of vineyards on its Val de Vie Estate to Perfect China. As a result, L'Huguenot now exports three South African brands to China -- L'Huguenot, Leopard's Leap and La Motte.

With a history of winemaking dating to the 1600s, the company came up with a strategy of hosting wine tasting events in hotels and high-end restaurants in China. And it paid off. Koegelenberg says he currently exports 3 million bottles to China every year, up from 1.5 million in 2012.

South Africa is the eighth-largest wine producer in the world and the emphasis is on classic mid-range products that would suit the Chinese market -- already the world's largest consumer of red wine, surpassing France and Italy since 2014.

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