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China is the key to growth for South Australian wine

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South Australia is known for its world-class wineries, but growing a wine business in a domestic market crowded by top-quality drops is a challenging task.

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In order to survive and thrive, many wineries in the small and medium enterprise space are looking to markets outside of the country to help them expand, and China, with its proximity to Australia and burgeoning middle-class, has proven an attractive port of call.

Heritage Barossa winery, Seppeltsfield, made a heavy play into the Chinese market with the recently announced Chateau Seppeltsfield Minquan, a joint venture between the winery and China-based Minquan Jiuding Wine Company.

According to Seppeltsfield’s sales and marketing manager, Chad Elson, this is a slight shift in the winery’s business model.

“To date, really, Seppeltsfield has had a really strong focus on the domestic market,” he says.

“As far as a business model goes, to the size of our winery, we have been very much focussed on our retail offering here at the cellar door, and developing our tourism model as a matter of priority, which is probably a little bit different to the typical wine business model.

“That’s only really been in the last 12 months, where we’ve decided that now that we’ve got our retail offering really pinging. The first step that we’ve wanted to do was utilise our networks in China to basically extend the tourism offering, and that’s really going to be the first market for us internationally that we drive from a packaged wine standpoint as well.”

Seppeltsfield has previously had a foothold in the market, selling premium bulk wine into the country, but by making moving packaged and branded wine into the market, it is hoped the greater brand recognition will lead to stronger tourism ties.

“We have a number of customers already who have visited our cellar door here in the Barossa, who are then travelling through China and have heard of the chateau in Henan, and have actually gone and visited whilst they’re in China,” Elson says.

“And then the reverse, obviously, is hopefully building a bit of a bridge from Chinese tourists visiting the chateau in Henan and then learning more about Seppeltsfield and making the decision to come to the Barossa Valley as well.”

In order to make the connections necessary for a project like Chateau Seppeltsfield Minquan, the winery has taken opportunities the state government has provided through trade missions.

“Warren (Randall, majority owner of Seppeltsfield Winery) has been on a couple of State Government-led trade missions, one with the Premier, and another with Minister Bignell, and during those missions obviously there’s lots of introductions made, connections made with other government officials in those markets that they visit, and I think that’s helped tremendously,” Elson says.

“And we had some support with the opening of the chateau itself through State Government assistance as well.”

Wines by Geoff Hardy has also moved into international markets, with their percentage of export sales shifting from 10 per cent in 2011 to 57 per cent in the last financial year. Richard Dolan, CEO at Wines by Geoff Hardy, estimates that China accounts for around 85 per cent of those export sales.

Having boots on the ground is important, he says, but “the key pivotal moment came with the employment of a Chinese language export manager”, Yuan Yuan.

“She’s got a postgraduate degree in wine business from Adelaide University, and we recruited her, and since then we crafted a strategy around her and around that part of the business very quickly,” Dolan says.

“We’ve won a couple of state-based export awards with the Hong Kong Australia Business Association two years running, Exporter of the Year, and a number of other business awards where we’ve been nominated as finalists in recognition of the growth of that part of the business.

“Yuan [Yuan]’s actually become a case study for Study Adelaide in their promotion of South Australian businesses recruiting more overseas students to really demonstrate the value that our overseas student population can bring in taking some of our SME businesses into overseas markets.”

While the Chinese market for wine currently presents abundant opportunity, Dolan cautions the industry not to put all of its eggs in one export basket.

“India is very much a future play for us, and we’re in our second year now of exporting to India as a direct result of participation in a government trade mission, so I think what we’ve got to be careful it’s not all about China,” he says.

Solstice Media has partnered with the South Australian Government to provide information about our state’s international connections and engagement.

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