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Vinintell May 2011, Issue 8

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Vinintell May 2011, Issue 8 VININTELL May 2011, Issue 8 WINE EXPORT MARKET SUSTAINABILITY: EU VERSUS ASIA WINE EXPORT MARKET SUSTAINABILITY: 1. Introduction ••• South African wine exports have shown a According to a report from Vinexpo, demand EU VERSUS ASIA decrease / flattening in the volume of exports for wine in China is exploding, with consump- tion growing 392 percent between 2005 and to major markets like the UK and the rest of 2009. Further growth is expected to rise traditional markets in Europe, while volumes another 56 percent between 2010 and 2014. Welcome to this edition of the quarterly newsletter as a value-added service to members of the to less traditional and new markets like S A Wine Industry. The purpose is to provide you, the decision-maker, with meaningful insight Scandinavia and countries in Asia have ••• into events, trends, opportunities and threats through the analysis of the ever-changing shown an increase. There are various rea- This edition of VinIntell will examine the EU / competitive environment. The analytical approach is a multifaceted, multidisciplinary combination sons behind this development that will be UK vs. the Asian market in terms of growth of scientific and non-scientific processes. discussed in this edition of VinIntell. and decline patterns, unique characteristics We trust that this publication will become part of your strategic thinking, strategic planning and ••• and challenges and opportunities. This edi- decision-making process. You are welcome to send comments and suggestions to the Per capita wine consumption has been falling tion will also seek to provide clarity on the publisher. for decades, especially in southern European question whether wine markets in Asia– countries, where changing consumption Pacific will over time come to substitute the habits (increased outdoor drinking, EU and more specifically and specifically the substitution of other beverages, changing Contents tastes) affect overall demand. UK market from a South African wine export 1. Introduction ..............................................................................................................3 perspective. Similar questions that arise ••• 2. Background .............................................................................................................3 include whether decline in traditional markets The lucrative nature of the Asian market is not are a trend that will continue and whether the 3. EU market with special reference to wine and characteristics ..................................6 a secret and competitors like New Zealand traditional markets will become maintenance 3.1 Consumption patterns in Europe ..............................................................................6 and Australia are targeting markets in Asia to markets while real sustainable growth lies 3.2 SA export stats to EU ..............................................................................................8 grow their exports. An official Chinese wine elsewhere in perhaps Asia and Africa. In delegation visited Australia in April 2011 as addition, does Asia have the capacity going 4. Asian wine market in brief ......................................................................................11 exports to the US and Britain take a pounding into the future to substitute the EU market? 4.1 Looking specifically at China ..................................................................................13 because of the soaring Australian dollar; a This edition will also look at consumption Wine exports to China ...........................................................................................14 similar situation to the South African Rand. projections, the export markets in these 4.2 Hong Kong a gateway ...........................................................................................17 Australian wine exporters hope to open up regions as well as growth trends and projec- avenues into the Chinese market with those tions. 4.3 The other significant wine markets in Asia ..............................................................18 coming involved in bar management, retail, Vietnam .................................................................................................................18 online trading and senior wine management. Japan .....................................................................................................................19 In the US, the dollar has cut Australian sales 2. Background Indonesia ...............................................................................................................19 by 40 percent. According to the US Foreign Research company, Global Industry Agricultural Service (FAS), South African wine Analysts2, forecasts global consumption of Philippines ..............................................................................................................19 experts believe that the trends in Asia are wine to reach 26.12 billion liters by the year Thailand .................................................................................................................20 conducive for successful expansion of the 2015, spurred on by substantial global Malaysia .................................................................................................................20 market for SA wines. Factors that contribute demand. Presently, the market is still feeling South Korea ...........................................................................................................21 to this are the increasing base of legal drinking under intense price pressures, triggered by age, advancing middle classes, rising urban rising competition and global oversupply. In 5. Key findings ...........................................................................................................22 population and emerging westernisation.1 terms of demand for wine or consumption, 2 3 the global market for wine witnessed a slow- The economic downturn also led to the trend growth in the market. Changing lifestyles in ing stiff competition from new world wine down in growth during the recessionary of consumers readily trading down to cheap- these countries, which mostly mimic Western regions like South Africa China, New Zealand years 2008 and 2009. The economic crisis er wine varieties, shunning the more exclu- lifestyles, is proving to be a major win for the and Australia, which are progressing at a and the subsequent deceleration in con- sive, expensive wines. By product group, the growth in wine consumption. Previously, rapid pace with large-scale production, clev- sumption, which added to the already exist- still wine category completely dominates the interest in wines was confined to middle- er marketing strategies and competitive pric- ing problem of over production, adversely wine market in terms of sheer size. However, aged customers, today a growing base of ing. Regions including the US, Australia, affected the global wine industry. with respect to growth pace the fortified wine younger consumers are exhibiting a marked Chile, New Zealand, South Africa and The sharp decline was primarily attributed to segment is expected to lead the way for the preference for wine over other alcoholic bev- Argentina increased their combined share in a drastic reduction in consumption in the EU, period 2007-2015. Segment wise, Cham- erages. the world market from 23 percent in 2005 to the largest market for wines worldwide. pagne recorded the highest decline in vol- 30 percent by the end of 2008. With the New players entering the market and greater Domestic EU wine consumption continues to ume as well as value sales in 2009. availability of improved, latest technical focus and investments in facilitating access decline, despite a slight economic recovery. Champagne exports declined by 45 percent know-how and equipment the new world and advertising and marketing campaigns Per capita wine consumption has been falling in terms of value and 40 percent in terms of regions are able to consistently produce intensified competition in the market place. for decades, especially in southern European volume during 2009. good quality wines. The market has witnessed an unprecedent- countries, where changing consumption ••• ed increase in wine sales through the Internet Vinexpo expects a 3.6 percent increase in habits (increased outdoor drinking, substitu- US outdrank France to become the largest over the past few years. the world wine market over the next five tion of other beverages, changing tastes) wine-consuming nation in the world in 2010. years (to 2015). Although, these figures are affect overall demand. ••• In terms of wine production, although con- less marked than the 4.8 percent growth ••• Demand has been recovering however. ventional wine producing European countries between 2003-2008 that still beats records Global consumption of wine to reach 26.12 Reasons for the growth in global demand are such as France, Spain and Italy still dominate in most of the groceries and other consumer billion liters by the year 2015. increasing adaptation of western lifestyles, the global market (see table 1), they are fac- goods on world markets. 4 ••• rising affluence and sophistication levels and Table 1: Changes in exports for key exporters: 2010 Another important factor is the anti-alcohol consumer shift towards premium alcoholic beverages. Underlying health benefits asso- drinking campaigns, especially aimed at Country Volume change (%) Volume change (%) Period of measure youth,
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