China – an important market for Western Australia’s wine industry future
A new report released by the Bankwest Curtin Economics Centre (BCEC) at Curtin University outlines major considerations for wine producers when exporting Western Australian wines to China.
The report, titled WA Wine Exports: Building an economic future with China, was completed in consultation with six key industry stakeholders and 26 wine producers across all WA wine regions to gain insight into expert issues and the Chinese market.
Lead researcher, Associate Professor Jeremy Galbreath, said the report identified five key themes: the growing market for Australian wines in China; distribution; packaging and product development; marketing and branding; and a business model innovation.
“There is a perception that WA’s wine production volume is too small to make any significant penetration into the Chinese market,” Associate Professor Galbreath said.
“Our research, however, determined that there was a definitive market for premium wine in China and that WA was well poised to meet a slice of that demand, providing wine producers consider a few key aspects when exporting their wine.
“Successful exporters must be creative around labels, colouring and wine descriptors, while investigating the value of creating new wine brands specific to the Chinese market.
“Wine producers should be aware of Chinese cultural ideologies with respect to colour preference when designing packing and developing their products.
“Producers should also be aware of the language differences and how terminology is understood when using descriptors of their wine on labels. This will ensure Chinese consumers understand the messages in the same way.”
The importance of precise marketing and branding of Western Australian wines was also highlighted as the impact of WA’s isolation presented additional challenges.
“Outside of some knowledgeable wine consumers, even regions like Margaret River have little global recognition. This needs to change in order for Western Australian wine producers to successfully increase exports to China,” Associate Professor Galbreath said.
“Recommended actions to address this include engaging industry to create a branding exercise on a regional basis, with the goal of putting WA wines on the global map.”
The report also identified a need for more innovative business models.
“Several participants in the research expressed that regional producers should investigate more thoroughly how they can collaborate or cooperate to increase the volume of their exports to China,” Associate Professor Galbreath said.
“This would help overcome some concerns about too many small producers acting alone, encouraging participation towards a common goal, and keeping individual brands intact.”
“The reality is that the majority of wine producers in WA are unprofitable and new business models are needed to restore profitability and to secure a sustainable future,” Associate Professor Galbreath said.
“With the Australian dollar at its lowest point in years, the time to develop partnerships with foreign investors is immediate.”
One additional issue that the report identifies as possibly being the biggest consideration of all, is distribution.
“As there are an estimated 20,000 wine importers in China, the industry really needs to sort out who the best importers/distributors are for WA wine,” Associate Professor Galbreath said.
Otherwise, many producers will spend far too much time and money trying to gain access to this massive market. Without trusted and focused distribution, frustration and failure is likely.”
The report was launched at a Curtin University led Tourism Research Cluster Symposium and is available via http://business.curtin.edu.au/bcec/our-reports/#bcec-series.
Funding for the report was provided by Bankwest Curtin Economics Centre.