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SA is now making wine specifically for the Chinese palate

www.businessinsider.co.za by Luke Daniel25/03/2022  

China is thirsting for South African wine, largely due to massive tariffs imposed on Australian imports, with local producers jumping at the opportunity and creating new blends specifically for this growing market.

The value of South Africa's wine exports to China has more than doubled over the past two years. That's thanks to Beijing imposing a 212% tariff on Australian wine imports amid a diplomatic and economic standoff starting in 2020.

Before these massive tariff increases, Australia was responsible for more than 40% of all wine exports to China. That market share dropped to just under 4% in 2021.

Wines from France, Chile, Italy, and Spain have filled the gap left by Australia's exit. South Africa is also starting to play a bigger role in China, which imports more than a billion litres of wine in a low consumption year, with local producers turning their attention to export opportunities.

"In terms of the market in China, it has been a focus market with growth opportunities for a few years now, however, in the big scheme of things, South African exports to this market have played a relatively small part until now," Maryna Calow, of Wines of South Africa, told Business Insider SA.

"The main reason for the recent growth in exports to China can be directly related to the trade war between China and Australia."

One of these South African producers focusing almost entirely on exporting wine to China is AM Vineyards. The company, which obtains its grapes from estates in the Cape Winelands region, is taking it a step further by creating new blends specifically for the Chinese palate.

"Despite being a relatively new wine-drinking nation, Chinese customers know what they like and want," said AM Vineyards' co-owner and owner-manager, Matthew Karan.

"For instance, we know they have a strong preference for eating red meats, particularly fine beef, so we created our Chinese export wines specifically to pair with the high-quality beef we know they like to eat."

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Matthew Karan

When it comes to understanding beef – and export opportunities to China – Karan is well-versed. Karan is the director of Karan Beef, which has the world's biggest feedlot south of Johannesburg. It accounts for around 70% of South Africa's beef exports.

Five years ago, Karan Beef gained access to China and immediately doubled its export volumes. Now, Karan, through AM Vineyards, is looking to achieve the same success with locally made wine.

One way in which AM Vineyards hopes to rise above the competition is to create wines specifically for the Chinese market.

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Instead of reallocating existing product, AM Vineyards has developed the Karan range, featuring two new red wines, The Collection and The Selection, "specifically to meet the needs of the Chinese palate."

These wines are "bold Bordeaux-style reds with medium- to full-bodied, fruity flavours complemented by earthy undertones on the nose". The Karan range will be distributed through existing export channels, built upon the beef business, "that are already focused largely on high-end restaurants and hotels".

* The headline of this article was changed subsequent to publication, removing a reference to "SA's biggest beef exporter".