The Chinese Communist Party’s effort to restore discipline in its ranks led to a crackdown on gift giving and extravagant official spending that’s hurting Swiss watchmakers, expensive restaurants and premium wine, Bloomberg reports.
South African wine sales in China fell 29 percent to 5.5 million liters in the 12 months through April compared to the previous year, according to industry association figures.
South African winemakers don’t have a high profile in China. The focus has been on
French wine, said Fongyee Walker, co-founder of Beijing-based Dragon Phoenix Wine
Consulting, which educates Chinese consumers and advises wine associations from Napa Valley in California to Hawkes Bay in New Zealand.
Hein Koegelenberg is CEO of La Motte vineyard in South Africa. He wants to tap the
Franschhoek valley’s French Huguenot heritage to challenge the dominance of French vintners in China, Bloomberg reports. Koegelenberg is the brother-in-law of Richemont Chairman Johann Rupert, South Africa’s richest billionaire with a net worth of $8.9 billion.
Koegelenberg plans to boost wine exports to China by 25 percent this year.
“China has the biggest market potential by far,” Koegelenberg said in an interview at La
Motte, owned by his wife, Hanneli, 77 kilometers (48 miles) east of Cape Town.
A crackdown by President Xi Jinping on corruption and the practice of gift giving hurt Chinese wine sales in 2013, Bloomberg reports. But China’s consumers overtook the French to become the biggest drinkers of red wine in the world, according to Vinexpo, an exhibition organized by the Bordeaux Chamber of Commerce and Industry, Bloomberg reports.
“Gifting is still huge, but you have to identify the right people,” said Koegelenberg. His
biggest clients are two Chinese entrepreneurs living in Malaysia who each buy 500 bottles of Hanneli R, which costs $100 (a bottle) before loading at Cape Town port.
French producers account for about 45 percent of China’s $1.5 billion wine import market– three times more than No. 2-ranked Australia — according to the Paris-based International Organisation of Vine and Wine.
By comparison, South African winemakers — with 2 percent of the market — have a ways to go, Koegelenberg told Bloomberg.
“We are nowhere in China,” said Koegelenberg, a former rugby player who plans to increase shipments by 25 percent to 1.75 million bottles this year. La Motte, Leopards Leap and L’Huguenot brand joint venture with Yangzhou Perfect of China account for more than 25 percent of South African wine sales to China, he said.
Although wine has been produced in South Africa for more than 300 years, exports suffered during the 46-year apartheid era that ended in 1994. Today South Africa is the world’s 11th-largest exporter by value. France and Italy are the top-ranked exporters, according to the International Organisation of Vine and Wine, Bloomberg reports.
The U.K., Sweden and Germany were South Africa’s largest export markets for bottled wine for the year ending in May. China ranked in tenth place and Angola was No. 11, Bloomberg reports.
