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South African Wines Target HK As Key Channel to Asian Markets

With the Hong Kong International Wine & Spirits Fair looming, South African wines are planning a major push, seeing the event as an integral part of their 2015 expansion plans, with the Asian markets now a clear priority for the sector.

Photo: Grape expectations: Pinotage, a source of success for South African wines. (WoSA)
Grape expectations: Pinotage, a source of success for South African wines.
Photo: Grape expectations: Pinotage, a source of success for South African wines. (WoSA)
Grape expectations: Pinotage, a source of success for South African wines.

South African winemakers, together with international export organisation Wines of South Africa (WoSA), are aggressively targetting the Hong Kong and Chinese market. The Hong Kong International Wine and Spirits Fair 2014 is one platform in a series of initiatives where the wine trade is hoping to create wider awareness of South African wines in Asia.

Back in 2012, wine writer Hugh Johnson described China as the "key growth market identified by South African vintners". Today, both South African wine producers and WoSA, the organisation tasked with promoting exports of South African wine, would undoubtedly agree.

China, after all, clearly has the potential to become the world's most substantial wine market. Developing the Chinese market – and the wider Asian market – is very much an ongoing strategic project for the South African wine industry. With a view to ramping up the profile of the country's wines, WoSA recently established an office in Hong Kong, enabling it to engage more directly both with the wine trade and consumers.

Explaining the thinking behind the move, Michaela Stander, WoSA's marketing manager for Asia, said: "Hong Kong, mainland China and Macau are important for us. This is not only because of the potential size of the market in the region, but also because of South Africa's recent inclusion in the BRICS economic bloc."

For the South African wine industry then, Hong Kong is not only a key market in itself – with wine consumption per head higher there than in any other part of Asia – but it also provides a springboard into the mainland, as well as the wider Asian region. Acknowledging this, Stander said: "Our intention is to use our Hong Kong base as a platform to build the profile of South Africa as a wine-producing nation capable of excellent products of outstanding value across a range of price points – from very high-end to affordable, everyday enjoyment."

To understand its current focus on Asia, it's important to look at the South African wine industry in an historical context. South African winemakers were long isolated from the international markets during the commercial sanctions of the apartheid era – a time when other New World wines were steadily accruing market share.

In the period immediately after the commercial boycotts came to an end, South African wine producers, keen to secure international orders, sold their wines at a price below their true market value. To an extent, the legacy of this under-pricing policy remains a burden for the South African wine industry two decades on.

South African wines have come a long way since the end of the sanctions era. There is a growing awareness of the world-class status of the country's wines. Influential wine critics, such as Jancis Robinson, Tim Atkin and Stephen Tanzer, have all lauded the quality of South African wines. It's not just down to what the pundits are saying, however. South Africa's best wines are also now winning international trophies, including success at the Six Nations Wine Challenge in Sydney.

Assessing the changing reputation of the country's wine output, Stander says: "There is a growing body of opinion among sommeliers in the UK, the US and parts of Asia, that South Africa is the country to watch, largely because of its exciting, often original wines. The number of South African wines now retailing in the higher price categories, of around US$65 to US$240 a bottle, is also rapidly rising."

Photo: Stander: 'original wines'.
Stander: "original wines".
Photo: Stander: 'original wines'.
Stander: "original wines".
Photo: Red wine: China’s preferred tipple. (WoSA)
Red wine: China's preferred tipple.
Photo: Red wine: China’s preferred tipple. (WoSA)
Red wine: China's preferred tipple.

As South Africa's top-level wines start to gain traction in Hong Kong and China, Stander expects the market response there to be similar. While growth is notably occurring in the luxury segment, she also emphasised that South Africa is continuing to cater to budget-conscious consumers in Asia and elsewhere, with wines in the US$12 to US$25 a bottle price range.

In an effort to create greater awareness of South African wines in the Chinese market, much of WoSA's focus is on educating the trade as the conduit to the end-consumer. Exhibiting at the International Hong Kong Wine and Spirits Fair, Vinexpo Asia Pacific and ProWine China is seen as key to exposing trade buyers to South African wines.

Bethchen Zaayman, International Export Manager for Blaauwklippen Vineyards, will be exhibiting at the Hong Kong International Wine and Spirits Fair for the third time. Explaining her reasons, she said: "For me, this show is particularly interesting. As well as buyers from Hong Kong, there are a significant number from China, the Philippines and Thailand."

WoSA is also wooing a number of top sommeliers in order to help build the profile of South African wine across Asia. In late 2013, it embarked on a marketing initiative in seven major Chinese cities, including Hong Kong, as part of a mission to build awareness of South African wine among sommeliers, the gateways to consumers.

This project was followed in April this year by a month-long promotion in Hong Kong to mark South Africa's 20th anniversary as a democracy. This included the opportunity for importers of South African wines to present their products, sommelier master classes and wine dinners featuring South African wines.

WoSA has also run retail promotions in Hong Kong at City'Super outlets and Watson's Wine stores, and provided training to Cathay Pacific staff in support of its on-board listing of South African wines. Greater visibility of South African wines in duty-free outlets is also helping to generate interest from Chinese consumers.

Among wine critics, it seems there is a consensus that South Africa's white wine categories have never been better. In light of this, are Chinese consumers missing out thanks to their well-known preference for red?

According to Stander, this cultural preference may be changing, as the Chinese wine market matures. She said: "We are finding that there is a growing appetite for white wines – in particular Chenin Blanc, South Africa's most widely planted varietal, as well as blended whites. Chinese consumers are enjoying the versatility of Chenin, which is capable of a wide taste profile – from bone-dry to fruitier styles – and in unwooded, or barrel-fermented or wood-aged forms."

Pieter Cronje, Marketing Manager for Uniwines, one of South Africa's leading wineries, agrees that there is a change coming in China's attitude to white wines. He said: "Especially in the youth segment of the market, and particularly among women, there is a growing preference in Asia for lighter and sweeter white wines."

South Africa's Cap Classique (the generic term for champagne-style wines from the Cape) is also said to be proving popular with Asian women. This style of sparkling wine has now moved beyond being a product reserved solely for celebrations and is becoming more popular as a general drink.

Photo: The vineyards of the Cape winelands. (Wesgro)
The vineyards of the Cape winelands.
Photo: The vineyards of the Cape winelands. (Wesgro)
The vineyards of the Cape winelands.

South Africa exported 26% more wine by volume in 2013 than in the previous year, an increase boosted by a bumper harvest and a weak rand. As the Chinese market is seen as becoming more receptive to New World, fresh and innovative styles, the South African wine industry is starting to see the benefits of increased retail and hospitality listings at key outlets.

Mark Ronan, Special correspondent, Cape Town

Content provided by Picture: HKTDC Research
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