Australian wine brand seeks bigger footprint

Australian wine brand Penfolds is aiming for a larger presence in the increasing important Chinese market, such as by offering a broader range of high-quality wines that cater to the preferences of predominantly younger consumers.

The plan comes amid robust exports and earnings in the group's recent financial year, which ended in June, and after it acquired a winery in China's Ningxia Hui autonomous region late last year to enable local production.

In an exclusive interview with China Daily, Penfolds managing director Tom King said China has always been a "strategically important market for us".

"We've got records of Penfolds first being shipped from Adelaide to Shanghai in 1893, so we've got a very long history of Penfolds being available in China," King said.

"The connection Penfolds has with Chinese consumers has been built up over many decades, and we're really proud of it."

Penfolds parent group Treasury Wine Estates posted underlying net profit after tax of A$470.6 million ($307.3 million) for the year ended June, up from A$407.5 million a year ago, according to a company statement, reflecting "a successful return to China for the Australian country of origin portfolio and continued positive momentum in a number of other key Asian markets".

Penfolds' worldwide country of origin wine production series now includes a winery in China's Ningxia, a fast-growing quality-grape growing area and winemaking hub. In December, Treasury Wine Estates announced that it had acquired a major stake in a 43-hectare luxury vineyard and modern winery in the region.

"When I think about the role that China plays for us now, historically it has been a sales market, but it's a production market for us now as well," King said.

"So similar to Australia, we're making wine in China, to sell in China and around the world. And we're bringing our wines from around the world to consumers in China. Our business has evolved somewhat over recent years to be not just fully functional from a production perspective, but more embedded in the local industry," he said.

To that effect, the Australian winemaker is involved in partnerships with the Chinese industry, including tertiary training and a China-Australia winemaker exchange program for talent development.

"We'd like to think that we're playing a more meaningful role in industry, in collaboration and learning. There's a lot to learn from each other. We see the real benefit of trade and cultural exchange not just for our business but for the industry as a whole, both here in Australia and in China," King said.

Penfolds is looking to build on its leading role amid the latest trends in the industry, including younger consumers' preferences for lighter, higher quality wines, he said, adding that the share of grape wine in the Chinese alcohol market is still low compared with that of local drinks like baijiu distilled liquor, which means there is much growth potential.

Young consumers who have "a luxury lifestyle or luxury-oriented repertoire of brands that play a meaningful role in their life" present a significant opportunity in China, King said.

In the 12 months to June, Australian wine exports rose by 13 percent in value to A$2.48 billion and 3 percent in volume to 639 million liters, according to the statutory body Wine Australia.

"We've adapted our business over that period of time, and certainly in the last 12 months, we're very much back to being full strength in the market with the right capability and the full portfolio. So we're very pleased with how the business is performing … we're very optimistic around the opportunity ahead for our business and the Penfolds brand in China," he said.

Contact the writers at xinxin@chinadaily.com.cn.