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Chile, Spain, addressing the void left by Australian wine in China

www.laprensalatina.com by 01/06/2021  

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According to various sources, Chilean and Spanish wines are presented as the best candidates to fill the void left in China by wines from Australia, victims of an import collapse due to the recent imposition of tariffs of up to 218 percent.

These are five-year levies, in force since Mar. 28, which replaced other temporary ones for five months that Chinese authorities imposed on Australian bottled wine while they finalized an investigation for alleged unfair competition and selling at a loss. It comes at a time relations between Beijing and Canberra are at a low.

The impact of these measures is beginning to be felt and, according to statistics from the National Customs Administration of China in the first quarter of the year. Chile has already surpassed Australia in both wine export volume and value (the South American country is now second in both categories, behind France.)

Nicolai Samsing, director for Asia of private promoter Wines of Chile, said in January that several wineries in the country managed to sign contracts with 17 Chinese distributors or importers who were not working with Chilean wine.

“Chile, Italy and Spain have to push for more importers to work with us,” he said.

Although Chile – whose wines enter the Chinese market at zero tariff thanks to a free trade agreement – has maintained its high volume, Samsing said adding that another challenge now is “to grow in value”: “Prices have to be able to rise a little.”

“This is the opportunity we have to take,” said Jose Alcazar, of Spanish wine importer Zhongxi Double Dragon, who added that “Chile is very well prepared to take the piece of cake” which until now belonged to Australia.

The Spanish businessman – who trades with Utiel-Requena, Jumilla and Ribera del Duero – said that since imposition of tariffs, several Chinese importers of Australian wine have contacted him.

“Most of the people who have called me since the tariffs (to Australia) want cheap bottled Spanish table wine. It is very difficult for a Chinese consumer to know how to differentiate the wines from Spain,” Alcazar said.

“(Chinese) importers want to make money now, this month. Here (in China) we live a lot from day to day. Next month, we’ll see,” he said.

His company’s sales of Spanish wine, in volume, have grown by 172 percent in the comparison between the first quarter of 2021 and 2019 (compared to that period of 2020, when China was paralyzed, the increase was 250 percent.)

In the Asian powerhouse, wine is a minority product, and the figures for 2018 from the market research company Euromonitor International show that it represents 10.3 percent of the alcoholic beverages market in the country, where beer has a 81.6 percent share.

Of that 10.3 percent of the total wine consumed in China, imported wine accounts for 40 percent.

Several sources said the Chinese consumer perceives it as a luxury product, which denotes Western tastes, sophistication, and whose consumption is more frequent in hotels, restaurants, coffee shops and karaoke bars.

The increase in Argentine wine has also been in bottled wine: in value, the country has increased by 11 percent in the year-on-year comparison of the first quarter compared to 2019, becoming the only major exporter to grow, according to Ezequiel Coppari, commercial manager at the Argentine Embassy in Beijing.

As per volume of Argentine bottled wine, data from Chinese customs shows a decrease of 6,000 liters between January and March 2021 compared to two years ago, insignificant when compared to the collapse of the more than 22 million liters suffered by Australian wines in the same period.

This means Australian wines fell in volume in the first quarter of the year by 85 percent compared to the same period in 2019, and by 75 percent in terms of value, according to the same source.

However, Eduardo Rivero, from Montes Toscanini said that despite the high tariffs, the highest-end Australian wine “will become a boutique wine, because there are those who do pay for it,” and brands such as Penfolds are, in addition to known, synonymous with cache.

Looking ahead, Nicolai Samsing, from Wines of Chile, warns that the opportunity now also opens for Chinese-produced wines.