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  • Jancis Robinson
Written by
  • Jancis Robinson
2 Jun 2018

A shorter version of this article is published by the Financial Times.  See also Happy days are here again by Max Allen. 

Australian wine's fortunes have been saved by China. 

At the beginning of the decade Australia's wine producers, once lauded as technically adept innovators and slick marketeers, were suffering a real crisis of confidence. What Aussies always call the 'GFC' (global financial crisis) had badly affected Australian exports, saddled with a strong dollar – partly thanks to China's then-insatiable demand for Australian natural resources. 

Not for the first time (see Drowning in wine) there was far too much Australian wine around that was too expensive to find a ready market abroad, and the muscle of the handful of large companies that dominate wine production and distribution in Australia led to widespread discounting in the country's bottle shops.

It had been back in the 1990s that the British fell madly in love with Australian wine, but this century many British wine drinkers, rightly or wrongly, turned away from Australia's big brands in favour of funkier, more artisanal, sometimes more traditional ferments from elsewhere. In the UK, Australian wine is much more likely to be found on the bottom shelf of a supermarket than on a prestigious wine list. Britain's imports of Australian wine in bulk, destined for the UK bottlers who shave crucial pennies per litre off supermarket prices, overtook those of bottled Australian wine as long ago as 2010. Four years later, Australia was sending six times as much wine in bulk to the UK as it was in bottle.

Many an Australian wine exporter seems to have virtually given up on the unprofitable UK market. Family-owned Yalumba, one of the most respected medium-sized wine producers in Australia who set up their own distribution company Negociants in the UK back in 1990 have just closed it down, for instance, as they have its US counterpart.

The UK may still be Australian wine's biggest export market by volume, but it has slumped to third by value, well behind the value of the much smaller, and declining, quantity of Australian wine imported into the US.

The American market has been more valuable to Australian wine exporters than the British one since 2009 when US demand for Australian wine peaked, very briefly. As I noted in How Australia went down under, the extraordinarily successful low-priced 'critter brand' Yellow Tail did no favours for the image of Australian wine in the US – and nor did the much more expensive but not necessarily long-lived Australian wines that Robert Parker chose to endorse. Today Australian wine exporters have suffered the ignominy of being definitively overtaken in total value of US wine imports by their much smaller rivals across the Tasman, New Zealand.

It's not difficult therefore to see why Australian wine producers have been spending all their time in China rather than in Europe or North America. Total Australian wine exports to China are worth more than twice those to the UK and almost twice those to the US. The average value of a litre of Australian wine exported to China, currently third most important export market by volume, is three and half times as much as the average value of a litre of wine imported by the penny-pinching Brits.

In stark contrast to their efforts in the UK and to a certain extent the US, the Australians have managed rapidly to position Australia as the highly profitable second most important wine supplier to the world's fastest growing wine market. Both of Australia's dominant wine companies – Accolade Wines, recently acquired by the American Carlyle group that doubtless has its eye on future prospects in China, and Treasury Wine Estates – have been focusing particularly hard on China.

TWE's flagship brand Penfolds has long been sufficiently admired by the Chinese to have been paid the compliment of a serious attempt at launching a wine brand called Benfolds using exactly the same distinctive type – a typically Chinese move. More recently TWE's marketing department have been shamelessly milking Penfolds' prestige with special, limited-edition, de luxe packages and variants. Penfolds Ampoule, anyone?

Australia was the featured nation at last week's Vinexpo Hong Kong, the international wine fair than alternates biennially with Vinexpo Bordeaux and is owned by Bordeaux's Chamber of Commerce. The French, and Bordelais in particular, who set their caps so determinedly at the Chinese in the first decade of this century seem resigned to allowing Australia a bit of the action. China's imports of French wine are far in excess of Australian imports by volume but the average price per litre of the Australian wine imported into China is more than a third higher than that of French wine imports.

This week, Wine Australia's China Roadshow, following immediately after Vinexpo Hong Kong and one of several activities boosted by AU$50 million from the Australian government, will see wine producers touring the second-tier cities Shenyang, Jinan and Wuhan as well as Shanghai, a city whose wine drinkers are already drinking huge quantities of Australian wine.

The country that does the job in China that falls to Australia in the UK (massive bulk shipments to fill low-priced bottles) is Chile, third most important supplier of wine to China by volume after France and Australia. Chile has the commercial advantage of having negotiated zero trade tariffs for wine exported to China, but Australia will follow suit next year, presumably thereby increasing its advantage over Chile. Three-quarters of Australian wine shipped to China is already in bottle, and 93% of all Australian wine that reaches China is red.

No wonder Australian wine producers are currently cautiously optimistic. They have seen the perils of concentrating too much on one export market before, but that isn't stopping anyone from adding an art gallery, spa or high-end restaurant to their winery in an attempt to capitalise on the huge and very visible influx of Chinese tourists into Australia.

And, unusually, right across the vast country, from Margaret River to Hunter Valley, everyone is bullish about the quality of the 2018 vintage recently gathered in and fermented.

If there is one underlying concern, it is not commercial but meteorological. Australia is not just chronically short of good-quality water, but is in the forefront of the effects of climate change on wine production. Harvests are in general getting earlier and earlier and the Shiraz vines – and to a less extent Chardonnay – that have dominated plantings are in theory no friends of very high temperatures. Vines have a habit of adapting to their environment but, just in case, many of the more thoughtful growers have been switching to grape varieties born in some of Europe's hotter climates.

There is an argument that the Australian wine scene is even more polarised than its counterparts because of the contrast between the big boys with their efficient, highly technological ways and the off-piste naturalistas who revel in the slightly cloudy, slightly fizzy, high-acid, low-alcohol opposite.

I'm a big fan of the best Australian wines, most of them somewhere between these two poles. I just hope they will save some of them for the rest of us.

Australia's Big Two
These are the leading Australian brands of the two dominant wine companies, both of which also own a number of mass-market California wine brands.

ACCOLADE

Hardys
St Hallett
Grant Burge
Petaluma
Knappstein
Stonier
Tatachilla
Houghton
Banrock Station

Pick of the lot: Houghton, Jack Mann Cabernet Sauvignon 2015 Frankland River
2014 is £73.99 Oz Wines

Relative bargain: Petaluma, Hanlin Hill Riesling 2016 Clare Valley
2015 is £18 Street Wines

TREASURY WINE ESTATES

Penfolds
Lindemans
Rosemount
Wolf Blass
Wynns Coonawarra Estate
Coldstream Hills
Annie's Lane
Devil's Lair
Rawson's Retreat

Pick of the lot: Penfolds Grange 2012 South Australia
£400 Oddbins

Relative bargain: Wynns Estate Cabernet Sauvignon 2014 Coonawarra
£22.50 Hailsham Cellars, also Harrods and Philglas & Swiggot