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Wine for China: SA case study success

In 2020, when the world went into pandemic lockdown and South African alcohol sales and exports were banned, the equivalent of 400 million bottles of wine had to be left in barrels.

This had the potential to devastate the local wine industry, which plays no small part in South Africa’s economy, having contributed 1.1% to GDP ($3.69bn) in 2019.

The knock-on effect was equally serious. The industry provided close to 300,000 jobs, accounting for slightly less than 2% of employment and providing $1.28bn in household income.

Around the same time, the Chinese government increased its tariff on Australian wines to more than 200%, leading to a 90% year-on-year drop in Australian wine imports.

China has a population of 50 million wine drinkers who quaffed approximately 1.24-billion litres of wine in 2020 – a low consumption year – 55% of which was imported.

China’s high import tariff doesn’t apply to South Africa, and there was a substantial gap to be filled. Step forward Stellenbosch’s AM Vineyards. Not only does the company produce fine wines predominantly for export, its owners also happen to be two of South Africa’s most experienced exporters.

Enter the Karan Beef clan

Co-owner and owner-manager Matthew Karan, of Karan Beef family fame, immediately spotted the opportunity to export wine to China. (Karan Beef has the world’s biggest feedlot and is responsible for 70% of South Africa’s beef exports.)

With more than 20-years’ experience in his family’s business, which exports its products to the Middle East and more recently China (which doubled export volumes), Karan knows all about navigating access networks, transport logistics, regulations and legal requirements, and the all-important cultural variances that exist between different markets. 

Matthew Karan & Andrew Robinson

Andrew Robinson, AM Vineyards’ other owner, was entirely on board. He has been actively involved in the production and global distribution of wine and spirits for more than a decade. He is driven by accelerating the global growth of South African products.

Mindful of the particular nature of Chinese culture, AM Vineyards was never going to simply re-allocate existing product to a new market. Instead, they developed the Karan range and took their time to create two new red wines, The Collection and The Selection, specifically to meet the needs of the Chinese palate.

The Chinese wine palate

“Despite being a relatively new wine-drinking nation, Chinese customers know what they like and want,” says 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.”

The two wines now being exported to China are bold Bordeaux-style reds with medium- to full-bodied, fruity flavours complemented by earthy undertones on the nose.

Given the cultural symbolism associated with the colour red in China, where it represents happiness, success and good fortune, it’s no surprise that 80% of the wine consumed in the country is red.

The Karan range is being distributed through Karan’s existing export channels that are already focused largely on high-end restaurants and hotels.

In 2020, South Africa was the world’s eighth-biggest wine-producing country, accounting for 4% of wine drunk globally. China is South Africa’s 4th top destination for wine exports and accounts for 4% of our total wine exports.

Interest in South African wines is on the rise in China. Despite 2020 being a relatively low-consumption year – down 15% on 2019, South African exports are back on a growth trajectory in both value and volume. Other East Asia markets such as Hong Kong are also growing.

With harvest currently underway, AM Vineyards will be producing more blends in the Karan range to further capitalise on the growing Chinese market.

Source: AM Vineyards

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