Particular part that caught my attention and thought I should share it here was:
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Here all roads lead to Asia, and more specifically, China. The statistics seem overwhelming. For the 12 months to September 30 this year, China imported 4.802 million litres of Australian wine with an FOB tax-free value of $10 per litre or above; over the same period and same value, the US imported 1.445 million litres and the UK 0.856 million litres. Hong Kong also imported 1.83 million litres, Singapore 1.085 million and Malaysia 0.961 million litres, the only non-Asian destination being Canada at 1.459 million litres. Thus Asia takes 60 per cent of the category most likely to be profitable (China and Hong Kong 42 per cent), compared to 9 per cent for the US and 5 per cent for the UK.
To make the China market even more attractive, according to figures from wineintelligence.com the country has half a billion internet users; 350 million have mobile phones with internet access; 250 million use the Chinese equivalent of Twitter; and 194 million bought online in 2011. It comes as no surprise that Dean Pearson, National Australia Bank's head of industry analysis, has pointed to the "huge potential" of the premium end of the wine market in China. Pearson says wine sales in China are expected to increase 50 per cent between 2013 and 2016. "As China's middle class continues to grow, so should its demand for more premium products, including quality [wines] that can't be produced en masse locally."
If all this were not enough, Chinese imports from EU countries have decreased by 27.9 per cent for this year compared to the same period last year, while imports from the New World, specifically Chile, Australia and the US, have increased significantly.
So to say China is a glittering prize is an understatement, but so is the need to be careful. The sheer rate of growth of a market that is newborn should sound a large alarm bell. It is quite certain tears will be shed and financial blood will be spilt over the next few years. The few with a real understanding of the complexity of the market all say the same things: traps for the unwary abound; the loss of a given sum of money will have far greater impact on the Australian exporter than the Chinese importer; importer-distributor margins (50-70 per cent) presently being sought are unsustainable; the knowledge of wine and food matching is scant, with Bordeaux seen as a normal match for Cantonese seafood; and counterfeiting is a major issue.
The list goes on and on, but there is one overarching truth learnt from the lessons of history. Where a trade relationship develops between two countries with a core product at the outset, other goods and products will be swept along by the tide.
If, as reported, 35,000 new Australian millionaires were created last financial year, the telephone book numbers of newly, affluent Chinese (and greater Asian) consumers will inevitably make these markets the world's largest. China now has more than one million millionaires, and more residents with wealth above $US50 million than any other country except the US. Factor in physical proximity and minimal time change shifts, and Australia has to be a key beneficiary.
BPG Price at posting:
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