CHANG, CHANGE EVERYWHERE A CHANGE

Friday, September 30, 2016

All you have to do is turn your TV on of an evening and you can see that the world as we know it is constantly changing. Some things for the better, many others for the worse. I could fill this whole blog just listing these changes, but that is not the point. The point is that our wine world is constantly changing at an ever increasing pace and unless we want to become dinosaurs, we need to change and adapt with it.

One of the biggest changes which is upon us now and starting to have a significant impact is online sales. The impact of this phenomena can be seen most clearly in China. A recent report by The Wine Intelligence said that 49% of China’s upper middle-class wine drinkers buy their imported wine online. They estimate that this market currently consists of around 20-22 million buyers. To put this into context, that is the equivalent of almost the whole of the population of Australia buying wine online!

This report was produced before Alibaba conducted the first ever “Tmall Wine & Spirits Festival” on September 9 this year. Whilst it is too early to get the resultant figures, they were predicting orders of 100 million bottles of wine for that day across the 100,000 different wines they purport to have listed on the site. That is 8.3 million cases (7,500 containers) of wine IN ONE DAY! So even if the first wine day was a failure, they will have sold probably around one to two million cases on that day, can you imagine that? This of course comes on top of “Singles Day” on November 11, when last year they received orders for one million bottles of wine for that day.

Alibaba, has across the board around 400 million online customers and has also forecast a tripling of its wine sales by 2019. In China they don’t perceive online products as simply being cheaper, in fact they often consider them to be of superior quality and pay more for them. This, coupled with their ubber fast delivery times (on average less than three days right across China and less than two days in the Tier 1 cities – Beijing, Shanghai, etc.) led to there being a total of over 15 billion online purchase transactions in China last year.

With an estimated 15% of all wine sales in China, Alibaba is now considering the possibility of direct importing wine itself, and also of selling super premium wines to the 150,000 to 200,000 members of its exclusive “Alibaba Passport” club.

These figures are very hard to comprehend and digest, but they augur well for our industry if we do things anywhere near as smartly as the Chinese are. Could you imagine our wine sales to China doubling or tripling in the next few years? Well it is a possibility if Alibaba’s founder Jack Ma gets his way. Or not, if we don’t get our act together, and they have to buy their wine from other countries such as the USA or South America, which would be a really sad enditement on us.

Where grapes are being grown is also changing quite significantly. This is in part thanks to global warming, with grapes now been grown in Nova Scotia, Sweden and of course the rapidly burgeoning English wine industry – set to double in size over the next few years. Not to mention China, who due to cultural changes now produce more wine than we do, and are embarked on a massive expansion drive, the likes of which are hard to fathom. They plan to nearly double their area under vine in the next 5-year plan – Yes, they are still a Communist country so they still have 5-year plans.

However, despite the world hotting up and vinous patriotism, the main reason for change is the tastes of consumers, which are constantly evolving and changing.

This is an environment in which we need to be ubber observant and aware, so that we don’t end up suffering like the French have and are about to. French domestic wine consumption has been falling regularly since long before the start of this century and now their exports, which used to compensate for falling domestic sales, are suffering at the hands of “New World” countries such as ourselves and Chile in particular. For example, Chile is now No.1 imported wine into Japan usurping France.

Therefore to ensure that we don’t suffer the same fate as some of the “Old World” producers are, we need to be mindful of the rising “New New World” producers, or probably better described as the “New Age” producers, as it includes ancient wine producers such as Greece, Austria and Georgia who are in the process of re-inventing themselves.

Our best defence against this change is the fact that unlike the Old World, we are prepared and happy to, experiment with new (to us) grape varieties rather than strangle our winemakers with ever stricter regulations. So much so, that in Burgundy you can’t even pick your own grapes before you get government approval – Imagine that!

This way our “offer” to the world is constantly changing and updating so as to keep us as a more exciting option in wine importing countries. When was the last time an exciting wine made from a new grape variety came out of the old wine world? 

There is a change which I would personally like to push, and that is to replace the word “Alternative” with “Innovative”, when talking about wines made from non-mainstream grape varieties. The term alternative has been used for the last few decades, and was appropriate when first used, but today it is increasingly been seen as meaning “lesser” or second choice, whereas as in fact, it should mean – more exciting. Did you know that in the late 1970s, Chardonnay was an "alternative" variety here in Australia?

Therefore, we will be doing our industry a great service (especially for those brave souls who are game to try new varieties), if we referred to these wines as being Innovative rather than Alternative. The Australian wine industry is the most innovative in the world, in every regard, especially in relation to trying new grape varieties with which to make wine. So, I believe that we should be broadcasting to the world that we make “Innovative” wines from varieties that are new to our country. What do you think? Innovative or Alternative?