South Australia wine producers to seize the exports re-boost brought by ChAFTA

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South Australian wine producers are seizing opportunities to boost their wine sales in the Shandong province, as part of the recently signed China Australia Free Trade Agreement.

Image: General View, Barossa Valley, South Australia by Matt Turner, provided by AWBC

Barossa-based winery Seppeltsfield said last week that it has secured a 1.5-million-litre annual exports deal with the Shandong-based Nanshan group, as one of the several business agreements signed during an official visit of South Australian Premier's delegation to the Shandong province, China.

The China-Australia Free Trade Agreement (ChAFTA), which is due to come into effect later this year, is widely expected to re-boost Australia’s wine exports to China, amid the lingering effect of Chinese government’s austerity measures.

In the 12 month period until March 2015, Australia wine exports to China increased by 20% to reach 44,000,000 litres, showing early signs of recovery, according to official figures released by Australian Grape and Wine Authority (AGWA).

Around 39m litres of the total are bottled wines, showing a 15% increase; bulk wines, on the other hand, showed a 77% increase to reach 5,000,000 litres, said officials.

Shandong and South Australia, in particular, have a close relationship that commenced in 1986. In November 2013, the city Qingdao, of Shandong province, and Adelaide upgraded its 11 year ‘friendly city’ relationship to a sister city relationship, according to the Department of State Development, South Australia.

‘South Australia would like to fully utilise the opportunity brought by the ChAFTA to upgrade its cooperation with China and Shandong in multiple areas,’ Jay Wilson Weatherill, South Australian Premier, told China News Service (CNS).

The 1.5-million-litre ‘premium’ South Australian wines, including 70-80% bulk and 20-30% bottled wine, were sold to the Chinese distributor for approximately AU$9,000,000 FOB, a spokesperson of Seppeltsfield told DecanterChina.com.

The retail price of these wines in the Chinese market, however, ‘is controlled by distributors’ thus unknown to the winery, said the spokesperson.

The wines will mainly be sourced from Barossa, as well as wines from McLaren Vale and Langhorne Creek, Warren Randall, the owner of Seppeltsfield, told ACB News.

‘All of them will be sold in China only,’ confirmed the spokesperson, ‘part of them will be bottled and sold on one of the brands owned by Seppeltsfield, the others will be bottled and sold on the brands owned by Nanshan group.’

These wines, as Warren Randall told ABC Rural, will be tailored by the winery to the Chinese palate. ‘The most important point is the total acidity,’ said Randall, ‘The Chinese (consumers)…are quite comfortable with dryness but they don't like high acid in their wine.’

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