Penfolds launches first Chinese made wine, which could be sold in other markets down the track
The luxury drinks group may consider exporting its new Chinese made wine in the future as it expands its foothold in the fledgling Chinese wine industry.
Penfolds could consider exporting its Chinese made wine in the future as it expands its foothold in the fledgling Chinese wine industry, according to its Shanghai-based chief executive Tom King.
In an interview with The Australian, on the launch of its first Chinese made wine, Mr King said Chinese made wine had the potential to become one of the company’s export brands.
“We are strong believers in the potential for the Chinese wine industry, and we would like to take an active role in its development,” he said.
“We have seen a real increase in the quality of the wine being produced in China in recent years.”
“Our ambition is to be selling Penfolds’ China wine in other markets around the world and bringing the experience of Chinese wine to consumers on a global basis.”
Mr King said global wine houses were already producing premium wines made in China, such as LVMH’s Ao Yun and Chateau Lafite’s Long Dai, which were “earning global acclaim.”
TWE, which owns Penfolds, has had a long focus on the potential of the Chinese wine market, which is set to become the world’s second largest by 2023, with an estimated 52 million regular wine drinkers.
Chinese drinkers consumed more than a billion litres of wine last year, making it the 7th leading wine consumer worldwide.
TWE was the largest single offshore supplier of wine to China until it was hit by steep tariffs imposed by China on Australian wine in November 2020, a move which reflected increasing political tensions between the two countries.
This has seen the company step up its focus on wine making in other regions, including France, the US and now China.
Mr King said demand for Penfolds wine in China has continued to be strong despite the slowdown in the Chinese economy.
The cession of export of bottled wine from Australia has prompted the company to export Penfolds’ wine made in California and France into the Chinese market.
Its pitch for the Chinese market is being underwritten by a strong support for the development of the local Chinese wine making industry.
Ningxia has been identified as a pilot zone for the development of the Chinese wine industry by the Chinese central government, with the region being visited by President Xi Jinping just before the Covid lockdowns.
TWE has continued to base its up-market Penfolds operations in Shanghai despite the tariffs and travel restrictions in the wake of Covid.
TWE chief executive Tim Ford said the release of a Penfolds wine made in China was the result of the company’s long term commitment to the market.
After the initial announcement in November 2020, China stepped up its action against Australian wine in March 2021, announcing the imposition of levies on wine of more than 200 per cent for some companies for the next five years.
The Federal Government lodged a complaint to the World Trade Organisation against the Chinese tariffs in June last year.
The China launch comes as Penfolds announced plans to market wine made in France, America, and China under a new brand of One by Penfolds.
The brand will be launched in mid 2023 with four wines from three wine making regions, all selling at a cost of around $50 a bottle.
The new brand will seek to highlight TWE’s diversification strategy, making a feature of the specifics of each production region, with Penfolds also working with local communities in each production area.
In China, it is partnering with the China Agricultural University to establish a student fund and an academic exchange program which supports winemaking and viticultural studies for local winemakers.
This follows a partnership announced earlier this year between the company and the China Alcoholic Drinks Association.
“Developing talent and sharing viticulture and wine making expertise underscores the partnership between the China Agricultural University and Penfolds,” Tianhong Li, dean of the college at the university, said on Thursday.
He said the financial assistance with tuition and access to wine samples around the world would assist students and help develop talent in the local wine making industry.
One by Penfolds will be available in China from October, with the brand launching next year in the other regions.
Penfolds’ links with China date back to 1893 when the first wine with a Penfolds label was exported from South Australia to Shanghai.
The launch of the China wine comes as Australia and China are set to mark 50 years of official ties between Beijing and Canberra in December.
Mr Ford presented China’s ambassador to Australia, Xiao Qian, with a bottle of the Chinese made wine at a reception at the embassy in Canberra earlier this month.
