South African wine company hits Chinese consumers’ good taste buds

AM Vineyards co-owners Andrew Robinson (right) and Matthew Karan saw an opportunity opening up in the Chinese market. (Photo: AM Vineyards)

When countries around the world were locked down by Covid-19 and alcohol sales were restricted in South Africa, AM Vineyards co-owners Andrew Robinson and Matthew Karan set their sights on the Chinese market for wine.

The company produces fine wines, mainly for export.

Robinson and Karan saw opportunities opening up in this market as the Chinese government increased its tariffs on Australian wines to more than 200%, alleging dumping. The increase in tariffs led to a 90% year-on-year drop in Australian wine imports into China. But the high import tariff does not apply to South African wine.

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China has a population of 50 million wine drinkers who consumed around 1.24 billion liters of wine in 2020 – despite being considered a low consumption year due to the pandemic. China imports about 55% of the wine consumed in this country. In 2020, South Africa was the eighth largest wine producing country in the world, accounting for 4% of the wine drunk globally. China is South Africa’s fourth largest destination for wine exports and accounts for 4% of total local wine exports.

“Interest in South African wines is on the rise in China. Although 2020 is a relatively low consumption year – down 15% from 2019, South African exports are back on a growth trajectory in value and volume. Other East Asian markets such as Hong Kong are also growing,” says Robinson.

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Robinson and Karan had both been entrepreneurs in China for many years and chose to put their experience to the test. They decided not to just export their existing wine products to China, but developed their Karan range, which includes two new red wines – The Collection and The Selection – specifically aimed at the Chinese market.

“Given the cultural symbolism associated with the color red in China – happiness, success and good fortune – it’s no surprise that 80% of the wine consumed in China is red,” says Karan.

Red meats, especially fine beef, are popular, so Chinese export wines were created with this in mind. The Karan range is largely focused on high-end restaurants and hotels, particularly in Beijing and Shanghai.

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

“Our business model is different from that of a typical winery. We have partnered with winemakers and farms in areas like Franschhoek, Elgin, the Hemel and Aarde Valley and Swartland, where our winemakers manage specific parcels of vines. We harvest and bottle our own wine and use our own cellars. It’s a versatile business model that allows us to get the best grapes, the best product and the best scale,” says Robinson.

“Wine is a growing industry in China, whereas in South Africa we have a history of wine production of over 300 years. Wine from South Africa is not well known in China, while they are more familiar with French, Australian and Chilean wines. This means that there is a lot of work to be done by the South African wine industry in China to present its excellent products.”

Some South African companies do, but only on a small scale.

“Our philosophy is never to put a square block in a round hole. Instead, make sure you understand your customers and what they want. We did a lot of consumer testing in China when we developed our Karan range so that it is perfect for the Chinese palate. . [The consumers] a well-aged, easy-drinking wine with low acidity and low tannin,” says Robinson.

“In China, we are in competition with the biggest global brands”

“Our strategy is not to develop products in South Africa and then send them to China. That’s why we developed the wine in China and then got our winemakers in South Africa to match that. .We have spent a lot of money testing consumers in the Chinese market .It is easy to send a first container of wine to this market but then the challenge is to get repeat orders – which they won’t only if they like your product.”

Asked about a possible impact of the crisis in Ukraine on their wine exports to China, Robinson said they currently have containers on the water en route to China. Chinese customs have already cleared other shipments.

“It’s too early to say what the impact of the Ukraine crisis might be for us at this stage. We don’t have any product for Russia and Europe. We’ll just wait and see,” Robinson said. . He adds that the Covid-19 pandemic has had a huge impact on price increases in transport and logistics.

“It makes it difficult for business owners to manage price increases without ending up going out of business. It makes doing business more difficult, but it also creates opportunities if you can be nimble and understand the numbers game. “says Robinson.

“In China, we compete with the biggest brands in the world, so getting the right product for that environment is important. It’s also about getting sommeliers and restaurant staff to taste our wine and know more about it. We are investing in educating Chinese consumers that South African wines can compete with the best in the world.”

What is the story of the SA wine they are spreading in China?

The Chinese market loves the history of SA wines – its long tradition. At the same time, they want a different and new wine.

“Our story is that South African wine straddles both the old world and new world approach to winemaking. We honor the history and tradition of the South African wine industry, but use also fresh, modern and smart techniques to blend our wines for the Chinese palate. And of course, we make sure we are selling a quality product to our Chinese customers,” says Robinson.

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