22 May 2015 Chin chin! South African wine booming in China

In South Africa, as in many other wine-producing countries, China represents the future. Squeezed by low margins and tough competition in Europe and North America, wineries are turning to a fledgling market that could expand swiftly as Chinese wealth increases and its consumer class grows. And the strategy seems to be paying off: South Africa’s wine sales to China soared by 63 per cent last year.

“I’m big in China,” says Hein Koegelenberg (left above), a wine magnate with a rugby player’s build and a broad grin. Married to Anton Rupert’s daughter, he heads two well-known estates in Franschhoek, La Motte and Leopard’s Leap. Along with his lesser-known Chinese joint venture, Perfect Wines of South Africa, he accounted for a good half of South Africa’s total wine exports to China in 2013, or 3m of 5.8m bottles.

Last year, after several years of spectacular growth, China became the world’s biggest market for red wine – bolstered by the fact that red is the unofficial national colour, considered a symbol of wealth and good fortune.

Over all, in all colours of wine, China is the world’s fifth-biggest market. Sales growth has recently slowed because of an anti-corruption crackdown that has reduced “gift-giving” of luxury products, but China’s wine consumption is still expected to grow by a robust 25 per cent from 2014 to 2018.

France, which has always dominated the Chinese market, currently supplies 45 per cent of China’s wine imports, while South Africa supplies only 3 per cent. But the South African industry is confident of dramatically boosting its sales to China over the next few years.

Koegelenberg, for example, took the advice of his Chinese partner, who told him to make the labels look French. So in 2011 “L’Huguenot” was born, a South African brand for China only.

The name is a tribute to the early French Protestant immigrants to South Africa, with traditional-looking labels featuring a vineyard sketch. But look closer and you see a Cape Dutch farmhouse, set in South Africa’s distinctive landscape.

The grape varieties are typically South African (a Chenin Blanc; a Shiraz-Pinotage blend) and chosen to complement the seafood of southern China and the spicy food of the centre-west.

Koegelenberg has had to keep up with China’s changing tastes: for example, sales of expensive wines for “gifting” to business partners have fallen off under the edicts of President Xi Jinping, mentioned above.

There has been a learning curve for all involved. Every year Koegelenberg brings 250 sales representatives from across China to the Cape winelands for a week. They learn about South Africa and how to taste wine, and visit the vineyards to see the picking, sorting and pressing of grapes. Mareli Roux, a public-relations manager, tells how the programme had to be adjusted. “They take a million pictures. We added time into the schedule for pictures.”

Swartland Winery

Swartland Winery, bought last year by William Wu, a Chinese electronics entrepreneur and immigrant to South Africa, is newer to the Chinese market. “He’s seen growth in Asia and wants to secure the supply chain,” says Terblanche. The winery made its first shipment to China last year, ahead of January sales for the Chinese New Year holiday.

Source: The Economist, The Globe & Mail

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