Australian wines looking on improving market share and recognition of fine wines in China

A GLASS of wine raised by a Hong Kong resident is likely to have come from an Australian vineyard, according to Lucy Anderson, who recently took up the new position of director, Asia for the Australian Wine and Brandy Corporation, based in Hong Kong.

"Hong Kong is a major market for the Australian wine industry," she says. "About 5.8 million litres, mostly shiraz and cabernet, were exported during the past 12 months at a value of more than $42 million. That makes the average price per litre about $7.30, although almost 20 per cent is exported at over the $10 per litre mark."

There are no duties and taxes applying to wine imported for consumption in Hong Kong. However, wines that are transferred to mainland China are subject to the same financial impositions as if they were shipped directly from Australia. There are several wine trade facilitation programs, including the Closer Economic Partnership Agreement between Hong Kong and mainland China, which suggest a benefit to using Hong Kong importer advice and expertise to access mainland China.

For the AWBC, a federal government organisation established to provide strategic support to the Australian wine sector, the importance of Hong Kong is not just as a market in its own right but for its role as a wine "hub".

It has the potential to influence trends within the region, especially through events such as the Wine and Spirits Fair, which attracts a huge audience from mainland China as well as other countries in the region.

The AWBC has increased its resources for the emerging Chinese wine market over the past year, not just by appointing Anderson but also by adding two more representatives, one in Shanghai and one in Beijing, supported by Austrade's offices.

"Hong Kong is a fairly mature wine market, similar to Japan and Singapore, without much room for overall volume growth within existing market segments," Anderson says.

"However, we think we can achieve greater market share and greater recognition of fine wines from Australia. The Chinese food service sector and local middle-class households are an area for potential growth. The ability for Australian wines to over-deliver on quality and value at higher price points is ahead of any other country, and that is significant.

"People here continue to look to France as the leading wine-producing country. Our challenge is to broaden that view, making sure Australia is on the radar when people are thinking about enjoying a glass of wine."

A key advantage is the community of expatriate Australians -- about 40,000 -- in Hong Kong. This is especially significant because most wine there is consumed in social settings, such as restaurants and bars, where personal recommendations and knowledge is crucial. But there has also been growth in the retail sector, both for lower-priced and more upmarket wines.

The secondary or auction wine market is also becoming important, especially after the removal of duties.

"That opened up that part of the market, to the point that Hong Kong is, I think, tipped to become the No 1 secondary market for wine, overtaking the traditional trading hubs of London and New York," Anderson says. "Hong Kong is in good shape, economically, at the moment. That feeds through to the high-value end of the market. There does not seem to have been much impact from the global financial crisis."

Anderson cites Australian wineries such as Torbreck, d'Arenberg and Elderton as particularly successful in Hong Kong, with strategies based on good products, the right local partner, regular market visits and a commitment to building a long-term market position. She does not know of any Australian wineries that have made a wine specifically for Hong Kong but some producers have created new labels for the market and might also use corks instead of screw caps.

"My aim is to build ties within the region while establishing a premium image for Australian wine," Anderson says.

"It is also about communicating back to Australian producers on where the opportunities lie and how they can best develop their regional strategies. Hong Kong is a very logical base for that."