STREAMING NOW: Watch Now

South Africa's wine growers see new demand from China

As wages rise in China, so has spending on luxury goods. And wine is one of them.Over the next four y...

Posted: Dec 13, 2018 6:37 AM
Updated: Dec 13, 2018 6:37 AM

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.

Africa

Alcoholic beverages

Asia

Beverage industry

Beverages

Business and industry sectors

Business, economy and trade

China

Consumer products

Continents and regions

East Asia

Exports and imports

Food and beverage industry

Food and drink

International trade

Kinds of foods and beverages

South Africa

Southern Africa

Trade and development

Wine

Wineries

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.

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.

Catering to Asian cuisine

The company has had to work hard on promoting South African wine to Chinese customers. Renier Van Deventer is head winemaker at L'Huguenot and Leopard's Leap.

He says the Chinese palate is very different to South Africa's. According to him, the company had to come up with notes "to match China's spicy and tangy cuisine."

"We did a lot of research in China and bringing Chinese clients to taste wines in South Africa with us," says Deventer. "The main feedback that we get stylistically for the wine is that they enjoy the smell of oak but then they want smooth soft fruit juices on the palate."

China's wine imports jumped more than 30% this year and the trend will likely continue. From January to March this year, China imported 200.57 million liters of wines worth around $792 million -- a year on year growth of 32.34% in volume and 35.84% in value, according to figures by the China Association for Import and Export of Wine and Spirits (CAWS).

But L'Huguenot faces competition from France, which is the largest wine exporter by value globally and tops China's wine imports country of origin.

"French wine, they've dominated (the) Chinese market for a long time, they have some big brand names in China," says James Tan, CEO at L'Huguenot Vineyards.

Fake labels flood the market

But he says he thinks South Africa has fought hard to match French brands with some unexpected advantages.

"They are facing a lot of challenges because in China there are fake big brands and the Chinese cannot tell the difference," says Tan. "We're very fortunate with South African wine -- we have the seal of origin, a certification that can guarantee what you see on the label is what you get."

The South African wine industry is broadly under pressure from climate change. In recent years, production has been hit by wildfires and the worst drought in a century.

China's high tariffs also make success in its markets an expensive venture.

"You pay a 49% tax in China when you import wine there," says Koegelenberg.

"That's a big challenge which is unfair to the South African wine industry because there are some countries in the world that can escape or go without import duties," says Tan.

Despite this, South African wines are gaining ground. Around 13,000 stores now stock L'Huguenot wine, with around 1,500 salespeople hosting wine parties within China to expose consumers to its new vintages, Koegelenberg says.

"We come from a bad history where we couldn't plant in all regions," says Koegelenberg, referring to South Africa's era of apartheid. "Now we are planting. So all of a sudden winemakers in South Africa are making excellent wines."

Read more from Marketplace Africa

Oregon Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 8931

Reported Deaths: 208
CountyConfirmedDeaths
Multnomah223969
Marion153947
Washington137920
Clackamas75124
Umatilla5334
Union3421
Lincoln3242
Deschutes1830
Lane1653
Linn1519
Polk14912
Yamhill1268
Malheur1241
Klamath1230
Jefferson1180
Jackson1170
Hood River880
Benton845
Wasco731
Morrow641
Clatsop490
Douglas420
Coos410
Josephine331
Columbia300
Lake190
Tillamook110
Crook100
Wallowa100
Curry70
Baker40
Grant10
Harney10
Sherman10
Gilliam00
Unassigned00
Wheeler00

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 238681

Reported Deaths: 6169
CountyConfirmedDeaths
Los Angeles1056653405
Riverside18041463
San Diego14623370
Orange14413345
San Bernardino12746258
Imperial652397
Alameda6156136
Fresno528975
Kern476876
Santa Clara4572158
Tulare4323128
San Joaquin391454
San Francisco364850
Sacramento339768
San Mateo3311108
Contra Costa324877
Ventura309646
Santa Barbara289629
Kings250434
Marin239419
Stanislaus231044
Monterey169115
Solano140225
Sonoma11857
Merced113111
Placer72411
San Luis Obispo6422
Yolo55524
Madera5415
Santa Cruz3993
Napa3334
San Benito2392
Lassen2330
El Dorado1980
Sutter1973
Butte1892
Humboldt1334
Shasta1294
Nevada1171
Glenn1150
Yuba941
Mendocino850
Tehama821
Lake790
Colusa590
Del Norte511
Mono421
Calaveras400
Inyo321
Siskiyou310
Tuolumne300
Mariposa271
Amador240
Plumas100
Alpine20
Trinity20
Sierra10
Unassigned00
Medford
Clear
71° wxIcon
Hi: 87° Lo: 53°
Feels Like: 71°
Brookings
Clear
74° wxIcon
Hi: 73° Lo: 49°
Feels Like: 74°
Crater Lake
Clear
68° wxIcon
Hi: 76° Lo: 46°
Feels Like: 68°
Grants Pass
Clear
73° wxIcon
Hi: 85° Lo: 53°
Feels Like: 73°
Klamath Falls
Clear
68° wxIcon
Hi: 80° Lo: 43°
Feels Like: 68°
Cool nights and warm days this week
KDRV Radar
KDRV Fire Danger
KDRV Weather Cam

Community Events

Latest Video

Image

Pet of the Week: Buttons, Beanies and Boots

Image

Thursday, July 2 afternoon weather

Image

Thursday, July 2 morning weather

Image

Wednesday, July 1st Evening Weather

Image

Klamath County marks first death linked to COVID-19

Image

Fireworks rules for Medford

Image

Wednesday, July 1 morning weather

Image

Tuesday, June 30th Evening Weather

Image

OSHA describes enforcement of statewide mask requirements

Image

Oregon OSHA charged with enforcing statewide mask mandate