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Grape expectations for Australian wine

Posted By Administration, Thursday, 9 January 2014


As the Australian dollar continues to do exporters no favours, this market will remain very difficult and competitive for Brand

Australia for some time to come.

- Robert Rees, Wine Exchange Asia

Photo courtesy of Tourism Australia

Two out of every five bottles of wine purchased in Singapore are from Australia; however, in this highly competitive market, that’s nothing to be complacent about.

"Australian wines are considered to be reliably good and value-for-money, and that reputation has earned us a strong hold on the local market here, especially for cheaper wines,” says Chris Rees, Austrade’s Incoming Senior Trade Commissioner for Singapore.

"However, Singapore is a relatively small market and there is increasing competition from ‘New World’ wine producers, including India, Thailand and countries of Eastern Europe and South America.”

The Southern Star spoke to four AustCham members working in the local wine sector, and all agree: competition is fierce and the strong Aussie dollar doesn’t help.

David Coleman, Chief Executive Officer of Rubicon Reserve Wines, says the popularity of Australian wines here has led to a perception of the product being good, but not necessarily great. He says it’s time to give consumers another reason to buy Australian; to focus on quality rather than quantity in this market.

"Market share here is not a two horse race anymore between France and Australia,” says David.

"Slowly, and to the definite benefit of Brand Australia, many Australian producers are moving away from bulk produced wines and concentrating again on making very good value for money wines in the premium end
of the market.

"While this will not give the high volume litre numbers to export figures, it will deliver a more sustainable industry, and in the future that means a better quality of product for the consumer too - everyone wins.”

Rubicon’s unique selling proposition is that it takes the guess work out of selecting wines in Singapore.

"There are many labels to choose from out there,” says David. "Rubicon answers that dilemma by only selecting the best wines at each price point.

According to Robert Rees, Senior Sales and Marketing Manager with Wine Exchange Asia, stiff competition from European and South American wines, is also becoming a major challenge for the wine industry ‘back home’.

"The reality is that the Italians can get a very good Pinot Grigio into a labelled bottle with a cork in it for less than the cost of the production of Australian wine as raw material alone,” says Robert.

"This will continue to be a major barrier to exports, and threaten domestic market share too, as more and more Australians turn to the consumption of cheap ‘foreign’ wines.”

Wine Exchange Asia confronts this challenge head on, by aiming to be the lowest price ‘no frills’ supplier of wines on the island. It has implemented an innovative sales value proposition featuring a new product every day of the working week.

"We aim to offer the best price on the island for that wine while stocks last – which is not usually very long,” says Robert.

According to Robert there is a major oversupply of wine importers here and a vast amount of unsold wines.

"It is a drinkers’ paradise, as prices are forced downwards to accommodate for this. Australian wine has suffered from this issue as have many other wine importing countries,” says Robert, who adds that the glut of wine product here has even led to Wine Exchange Asia repatriating Australian red wines back to Australia.

Austrade has been instrumental in supporting the Wine Australia rebranding campaigns over recent years, including assisting Australian wine suppliers to showcase premium wine offerings at the annual Food and Hotel Asia event in Singapore.

Arjen Blom, Principal, of Wine Directions attributes the success of Australian wine in this market to their suitability for an Asian palate.

"Australian wines are well suited to Asian foods and Asian palates. They are more fruit driven and have a smooth palate and provide a better value for money ratio,” explains Arjen.

Wine Directions only works with boutique wineries and refrains from selling wine through the regular retail channels.

"By keeping our overhead costs low, we are able to offer our wines at prices that are 20 to 25% below the regular retail price,” says Arjen.

Arjen also says, "There is more work to be done to make the market understand that there are also great value-for-money Australian wines in the higher price segment, instead of looking at the famous Old World areas, such as France, for those wines”.

According to Rachel Meisner, General Manager, Sales and Marketing, Pan-Asia with Accolade Wines, consumers are now more likely to choose Australian or other New World wines because of their approachable style and easily understood labelling.

Accolade owns iconic Australian brands, such as Hardys and Banrock Station, many of which have been present in Singapore for more than 15 years.

"In the imported still wine segment, Australia has the largest market share in Singapore in volume (29%) and is second in terms of value (24%), after France,” says Rachel.

"The market is fiercely competitive, however, and New World wines from Argentina, Chile and the USA are rapidly gaining ground.”

"Accolade Wines has a large diversified portfolio of wines at various price points – from entry level to luxury and icon brands. At all price points, our wines have always over-delivered on quality. This is a testament to our vastly talented winemakers and their vision and winemaking skill,” says Rachel.

"Accolade Wines markets our product in the same way to both locals and expats – by focusing on their quality. Our brands are positioned at the mass market and, as such, our biggest opportunity has always been in the volume part of the wine segment.

"Rather than pushing for premiumisation, we offer easy drinking, value-for-money wines that consumers can enjoy every day.”

While this approach tends to be the norm amongst wine suppliers here, David from Rubicon points out that some Australian product is intentionally skewed towards the local Chinese market, such as the Abundance range, which is aimed at Chinese New Year sales and features ‘Gong Xi Fa Cai’ and Chinese zodiac characters in its labelling.

However, all four wine suppliers we spoke to agree that the hard work is beginning to pay off and local consumers are increasingly looking beyond entry level Australian wines and starting to appreciate and explore the regionality and quality of premium Australian wines.

"The Australian wine industry is today producing outstanding wines and I believe the category will continue to grow in the future. In Singapore, there has been an emergence of consumers looking beyond entry level Australian wines and starting to appreciate and explore the regionality of Australian wines”, says Rachel.

accolade-wines.com

rubiconreservewines.com.sg

winedirections.com

wineexchangeasia.com


Tags:  Accolade Wines  Australian Business Success Stories  Grape expectations for Australian wine  Rubicon Reserve Wines  Wine Directions  Wine Exchange Asia 

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