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 9:37 AM
Updated: Dec 13, 2018 9:37 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

Terre Haute
Overcast
47° wxIcon
Hi: 51° Lo: 39°
Feels Like: 44°
Robinson
Overcast
45° wxIcon
Hi: 50° Lo: 37°
Feels Like: 41°
Indianapolis
Overcast
45° wxIcon
Hi: 52° Lo: 40°
Feels Like: 41°
Rockville
Overcast
41° wxIcon
Hi: 50° Lo: 38°
Feels Like: 38°
Casey
Overcast
42° wxIcon
Hi: 49° Lo: 37°
Feels Like: 38°
Brazil
Overcast
47° wxIcon
Hi: 52° Lo: 40°
Feels Like: 44°
Marshall
Overcast
47° wxIcon
Hi: 49° Lo: 37°
Feels Like: 44°
Cloudy with Afternoon Rain
WTHI Planner
WTHI Temps
WTHI Radar

Latest Video

Image

Sunday Evening Forecast

Image

New named tropical storm

Image

Unreal Nightmare Escapes

Image

Church offers trunk-or-treat

Image

Jeep Junkies Trunk-or-Treat

Image

Riders compete at Griffin Bike Park

Image

College Goal Sunday

Image

Remembering Leeam Pritcher

Image

Bike competition this weekend

Image

Bikes for Tykes Assembly Day

WTHI Events

 

Illinois Coronavirus Cases

(Widget updates once daily at 7 p.m. CT)

Confirmed Cases: 374901

Reported Deaths: 9751
CountyConfirmedDeaths
Cook1738175409
DuPage22546607
Lake20485509
Will18179427
Kane16453347
Winnebago10052180
St. Clair7878218
Madison7084154
McHenry6225120
Champaign604829
Unassigned4787270
Peoria448570
McLean410334
Rock Island396090
Sangamon389663
Kankakee336680
Macon296951
Kendall263030
Tazewell259456
LaSalle237863
DeKalb231742
Coles189639
Williamson185759
Adams183819
Boone183025
Clinton173326
Vermilion169710
Jackson152426
Whiteside138725
Knox127216
Randolph124915
Ogle11857
Effingham11594
Marion99119
Grundy9607
Franklin9529
Stephenson9497
Monroe90329
Bureau89517
Jefferson89348
Morgan89024
Henry8427
Christian81129
Macoupin78410
Union78425
McDonough73920
Lee7051
Fayette67422
Douglas6559
Shelby65312
Crawford6446
Livingston62610
Montgomery60916
Woodford59614
Logan5894
Saline5559
Fulton4981
Warren4938
Iroquois48919
Bond4889
Jo Daviess4867
Wayne48112
Jersey47021
Cass46011
Perry43016
Moultrie4084
Carroll40111
Johnson3460
Richland33316
Lawrence3328
Pike3326
Hancock3094
Clark30717
Clay30713
Washington3012
Mason3001
Greene28715
Cumberland2816
White2644
Jasper26110
De Witt2556
Mercer2526
Piatt2440
Pulaski2351
Wabash2205
Ford19112
Menard1821
Massac1542
Edgar15310
Marshall1503
Henderson1280
Alexander1201
Hamilton1172
Brown1070
Edwards1070
Gallatin1062
Scott1020
Schuyler911
Putnam900
Stark853
Calhoun670
Hardin530
Pope421
Out of IL80

Indiana Coronavirus Cases

(Widget updates once daily at 8 p.m. ET)

Confirmed Cases: 160454

Reported Deaths: 4118
CountyConfirmedDeaths
Marion25691791
Lake14023358
St. Joseph9399165
Elkhart9026137
Allen8424230
Hamilton6293114
Vanderburgh601161
Tippecanoe383615
Hendricks3337133
Porter332350
Monroe330338
Johnson3207129
Delaware303474
Clark300763
Vigo268740
Madison244996
LaPorte231760
Cass226922
Warrick199565
Kosciusko193727
Floyd183968
Howard167066
Bartholomew145358
Dubois142726
Marshall142726
Wayne135331
Grant129739
Henry129730
Boone126950
Hancock122344
Noble119135
Jackson116417
Dearborn100028
Morgan97440
Lawrence94037
Gibson91512
Daviess90234
Clinton88916
Shelby87231
LaGrange82115
Knox79510
Harrison78324
Putnam75616
Posey7556
DeKalb74511
Fayette73218
Jasper6435
Miami6425
Steuben6408
Montgomery60422
White59915
Greene55838
Scott53413
Decatur51739
Adams5107
Whitley4696
Ripley4668
Clay4567
Sullivan45214
Wells44211
Starke4328
Wabash4329
Huntington4215
Orange41725
Spencer4046
Washington3843
Franklin37925
Jennings37313
Randolph37210
Fulton3714
Jefferson3455
Pike34018
Perry33314
Carroll33213
Jay3256
Fountain3193
Tipton28023
Vermillion2601
Parke2464
Blackford2313
Newton23011
Rush2254
Owen2101
Martin2010
Crawford1601
Pulaski1602
Brown1463
Ohio1317
Union1120
Benton1090
Switzerland960
Warren891
Unassigned0236