Asian wine markets now a global industry driver
Is a glass of merlot the symbol of globalisation, a research magazine on the wine trade asked recently – and figures on wine consumption in major Asian economies may well tip the scales towards an affirmative answer in this part of the world.
Asia as a whole is expected to be the driver of world wine market growth – rising consumption coupled with growing middle class purchasing power, considerations of health benefits and status symbols have boosted markets in China, India and South Korea alongside Singapore and the stable, traditionally big Japanese wine market. All this is making wine producers around the globe increasingly look to Asia.
According to the China Wines Information Website, an authoritative Chinese wine industry portal, sales of wine in China have been growing by 15-20 percent annually since 1999.
One of the key global events for wine producers and buyers is Vinexpo. The fourth Asia-Pacific Vinexpo brought exhibitors from 35 countries to Hong Kong in May 2010.
The choice of event location had been deliberate, explained Vinexpo’s chief executive Robert Beynat to the UK’s Harpers Wine and Spirit Magazine.
A Vinexpo study by the International Wine and Spirits Record (ISWR) showed that even though China is only the eighth largest consumer of wine in the world, Chinese wine consumption is projected to rise by roughly a third by 2013. Overall wine consumption in Asia will jump by a quarter by 2015.
Asia is now arguably the priority market for driving growth globally, and among New Zealand wine exporters.
Sales into Asia have increased from NZ$10 million in 2001 to more than NZ$45 million in 2009, as New Zealand Winegrowers’ CEO Philip Gregan explained at an Asia:NZ business seminar on opportunities for New Zealand wine in Asia. Mr Gregan estimates New Zealand wine exports to Asia will easily exceed $50 million in 2010.
The South Korean market
In addition to the traditional wine market of Japan and the powerhouse market of China, South Korea is emerging as another important destination for New Zealand wine. New Zealand Trade and Enterprise (NZTE) reports that until 2001, only one New Zealand winery had a presence in the Korean market. The number grew to 38 in just six years.
Global business information provider Datamonitor notes that the overall market for wine in South Korea registered an increase of over 20 percent for every year between 2002-2007. Over that period wine consumption in the country doubled. The Vinexpo / IWSR study projects that by 2013, growth in Korean wine consumption will have reached 83 percent, one of the largest increases projected globally.
What would be the impact of a Korea-NZ FTA on wine exports?
Another current development in South Korea is being closely watched by the New Zealand wine industry, namely the negotiations for a free trade agreement (FTA) between South Korea and New Zealand.
“How much an FTA impacts on New Zealand wine is a moot point,” says Dr Tim Beal of Victoria University’s School of Marketing and International Business. Together with Dr Michel Rod, he was the co-author of recent research into the Japanese and Singaporean wine markets. “If we were a cheap producer, it would be very important; and if we were at the top end of the market à la France, then it would have little impact. But we are in an awkward middle zone and that is why we need to have detailed research, utilising the opinion of people on the spot, such as Joshua Hall.”
Dr Beal is planning research further afield in the Korean market. He will be a visiting fellow at the Korea Institute for International Economic Policy (KIEP) in Seoul in October 2010. The Japan, Singapore, China and South Korea markets, he reiterates, are very important markets for New Zealand wine and New Zealand wine expertise.
South Korea has FTAs in effect with Chile, Singapore, ASEAN and India. KORUS, Korea’s FTA with the United States – another major wine exporter – is yet to be ratified in either country.
Competition is strong in the South Korean wine market as more and more Koreans adopt a Westernised diet or consume wine for its perceived health benefits. Chile noted a major boost in wine exports to South Korea after the FTA was signed. Australia, currently negotiating an FTA, will hope to drive its own wine exports to South Korea.
In 2009 South Korea and the European Union signed what has been described as the second largest FTA in history, behind NAFTA. It is expected European wine imports will rise substantially as tariffs are lifted at the FTA’s entry into force.
As for the New Zealand wine industry, experts do not hesitate to stress there is a need to put in place a significant marketing investment and build brand name recognition on the back of ‘NZ Inc’ in order to take advantage of the long-term opportunities in the Asian markets.
Related pages:
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Wine: Marker of Social Change (Dr Tim Beal and Dr Michel Rod)
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An expat Kiwi’s blog on the Korean wine market - Joshua Hall
Photos 1 and 3 courtesy of the Wine: Marker of Social Change project
Photo 2 - Vinexpo Hong Kong 2010, by Hervé Lefebvre at Vinexpo.com
