China: A Key To Sustained Growth

The continuing development of China as a major consumer of wine is seeing the nation emerge as an important player in the growth of both the wine and cork industries.

After solid increases in natural cork stopper sales throughout 2010, major cork producers had the confidence to declare a “return to cork” at this year’s Vinexpo exhibition.

Leading the way was Amorim with sales of more than 3 billion cork wine stoppers — its best-ever annual sales result. Amorim has continued its sales growth in the first nine months of 2011, posting sales of 2.6 billion stoppers, an increase of 200 million on the same period last year.

While all major wine producing markets are using more cork closures, the emergence of China as the world’s fastest growing wine market has the potential to provide a significant boost to cork’s resurgence.

Commenting on the Rabobank Wine Quarterly report in April this year, co-author and Rabobank senior analyst Marc Soccio said the “scale and durability of the growth in Chinese demand for grape wine in recent years has been nothing short of remarkable”.

Last year China became one of the top 10 wine-consuming countries in the world and imports of bottled wine increased by 61 percent to 146 million litres. This reflects the demand for quality imported wines from a growing middle class consumer base.

France is the largest exporter of bottled wine to China. It held a huge 46 percent of the market in 2010 and its share is growing. Figures for the first six months of this year showed France had increased its exports by 71 per cent and held 48 per cent of the Chinese import market.

“With wine consumption still predominately based around customary entertaining and gift-giving occasions, Chinese consumers are primarily interested in making a ‘safe’ purchase that can confidently convey a suitable level of prestige, status and respect — more often than not, this means French,” said Soccio.

In an October 2010 presentation at the Winemakers’ Federation of Australia Outlook Conference, Rabobank said developing a localised strategy for marketing and packaging in response to consumer preferences was a must in China. Chinese consumers were described as particularly sensitive to packaging that conveyed prestige and heritage and this preference always includes a cork.

Australia is the second biggest exporter of bottled wine to China with 16 per cent market share in 2010. Despite the heavy adoption of screwcaps domestically many Australian wineries recognise the importance of sealing wine with cork for China.

The 2011 Closure Report produced by the Australian & New Zealand Grapegrower & Winemakermagazine from a survey of 266 Australian wineries showed that screwcap use on Australian bottled wine dropped significantly if the wine was being sold in an export market.

The report stated that the largest segment of Australian wines still closed with natural cork is on wine sold for more than AUD$21 in China and the United States.

“There’s no doubt Australian wineries love screwcaps but these figures do show that consumer preference for cork, particularly in China and United States, still forces Australian wineries to use this type of closure, despite their own preferences,” said Grapegrower & Winemaker publisher, Winetitles, general manager Elizabeth Bouzoudis.

In an article published in the August 2011 edition of Grapegrower & Winemaker, Tony Royal, the national commercial director of Australia’s largest independent wine services supplier Portavin, said the company was experiencing a return to cork by Australian wineries due to growing interest and entry into the Chinese market.

“It’s new but it’s still a highly competitive market and as a result Australian wineries are having to accept that China wants cork — there’s no room to dictate individual preferences,” he said.

“For China, it’s all about the ‘natural’ cork. Synthetic cork is considered by most consumers as cheap as screwcaps.”

Amorim chairman and CEO António Amorim said he would be watching the continuing development of China as a major consumer of bottled wine with great interest.

“We know the Chinese market is very traditional with a focus on the premium image of wine and that is one reason why French winemakers have had so much success there,” he said.

“The forecast development of this market and the overwhelming preference for cork closures by Chinese consumers gives us another reason to be very optimistic about achieving sustained global growth for cork stoppers.”