When China imposed 218% tariffs on Australian wine, effectively halting sales in 2020, the Australian Wine Industry was on the brink of collapse, so it went looking for alternative solutions, particularly in Korea. According to the Australian Bureau of Agricultural and Resource Economics (ABARES) Korea is now the fifth largest export market after China, Japan, the US, and Vietnam, and the tenth most valuable. It remains a hotspot for growth, as reported by Wine Intelligence.
Wine made from grapes only constitutes 13% of alcohol sales in Korea, overshadowed by the popularity of rice wine which commands 85% of the market. However, the landscape is changing. The number of grape-based wine consumers has grown from 10.2 million in 2017 to 12.6 million in 2022. This trend signals a rising interest in a beverage that is predominantly consumed at home, suggests Wine Intelligence. However, only three 3% of Korean wine drinkers currently include Australian wines as a preference. According to Wine Australia, only around 15% of individuals considering a purchase opt for one of its bottles. Like Japan, Korea is a premium market and Australian wine lacks a distinctive position and is largely perceived as ‘accessible’.
Nevertheless, a Wine Australia spokesperson suggested that demand for premium wine exports continues to surge in North East Asia. She reported that consumers are increasingly drawn to the stories, the people, and the locations associated with wine production. This interest is reflected in the 65% volume and 93% value of glass bottle exports.
As reported by Meininger’s, however, the entire Northeast Asia region – China, Hong Kong, Japan, Korea, Taiwan and Macau – collectively only buys 30m litres, with a value of AU$318.4m ($211.8). Sales to all of these, apart from tiny Macau – a 200,000 litre market – fell between April 1st, 2022 to March 31st, 2023, with Korea seeing a 18% cut in volume and 7% fall in value.
Exploring new markets
In order to tap into the unexplored opportunities in Korea, the Australian Food and Wine Collaboration Group was founded in July 2022 and secured a grant of AU$500,000 from the Agriculture Trade and Market Access Cooperation (ATMAC) to facilitate their efforts.
Recently, they organized an online cooking competition aimed at young people, showcasing how Australian produce can enhance home-cooked meals. Over 48,000 people visited the competition website, highlighting Australian fresh produce and wine. The top 10 entries were selected as finalists, and the top two cooks competed at the Gala Dinner in Seoul, attended by influential foodies, industry representatives, importers, distributors and government officials, on June 15th. Sung Ju Choi won the Grand Prize for their "Australia's Sea and Land in One Bite" rose salmon beef pie with lemon cream sauce.
A new focus
Australia is also understandably planning to expand sales to Southeast Asia, the only market – with the exception of Singapore which saw a 20% fall in the value of its imports - to show significant growth between 2022-2023.
Thailand, Malaysia, Indonesia, Philippines and Vietnam collectively import 17.4m litres with a value of AU$167m ($111.1m) – around AU$9.5 ($6.32) per litre. As a group, their financial contribution is moving closer to the export value to the US and the UK
“While economic pressures are visibly impacting some markets in Northeast Asia, the strength of Southeast Asia has resulted in closer export ties with the US and the UK, which is a positive development for Australian exporters seeking diversification,” reports Sarah Roberts, Regional General Manager for the region. “Despite some ongoing global travel and logistics challenges, Australia is well-positioned to sustain this growth in key markets and cater to our trade partners in the neighboring region.”
The initiative aligns with the campaign ‘Taste the Wonders of Australia’ which targets the untapped potential of Asian markets, particularly Thailand, Vietnam, and Indonesia. A roadshow will be hosted under the same theme with events in Hanoi and Ho Chi Minh City, offering guests the opportunity to explore their wines. Additionally, the group is collaborating with Austrade to gather current market insights and trends.
It remains to be seen how effective roadshows and online cooking competitions in what are still relatively small markets for Australia will be in helping to dispose of the surplus wine currently sitting in Australian winery tanks.