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South Africa's wine growers see new demand from China


Wine consumption in China is expected to rise by more than a third to $23 billion in 2021, when it will reach a volume of 192 million cases, according to Vinexpo. That's a growth rate of 30%.
Noticing this trend, Hein Koegelenberg, chairman at the South African wine producer L'Huguenot Vineyards, saw an opportunity. In 2013, together with Chinese distribution company Yangzhou Perfect China, the company created a range of wines specifically for the Chinese market. The result was Perfect Wines of South Africa and the brand now accounts for 25% of all South African wines sales in China.
Online sales potential
L'Huguenot Vineyards is 40 minutes from Cape Town, within the country's Paarl-Franschhoek Valley. And the company's move is indicative of efforts by South African growers to boost online exports by catering to the Chinese market.
"China are the leaders in e-commerce," says Koegelenberg. "I think of the foreign wines sold last year, 49% was sold through the internet," he adds.
While a large amount of wine is exported around the African continent, producers in South Africa are increasingly looking towards the U.S. and Asia as their target export markets. The Chinese are among those who are warming up to the South African flavors, and in 2015 exports to China jumped by 40%.
South Africa is home to around 100,000 hectares of vineyards employing 300,000 people. The industry makes up 2% of GDP.
 Wine was first planted here by European settlers in the 17th century. The oldest fruit-bearing vine in the Southern Hemisphere is located in Cape Town, a Crouchen Blanc planted in around 1771.
 
One aspect that sets South Africa's wine industry apart is the ubiquity of ethical accreditations. It is the largest producer of Fairtrade wine -- accounting for two-thirds of global sales.

 Some organic producers take this one step further, by using ducks to keep their vines in shape as seen here in Paarl, 31 miles from Cape Town. The ducks patrol the long rows of vines in the hunt for snails. Predatory wasps and beetles are also released to tackle mealy bugs which feed on plant sap.
 
The industry produces a mix of grape varieties. Chenin Blanc and Colombard, its close cousin, are the most popular whites produced, while Cabernet Sauvignon is the favorite among the reds.

In terms of New World varieties, Pinotage, a cross between Pinot Noir and Cinsaut, is the most notable.

The industry may be be predicted to grow, but there could be trouble ahead. In recent years growers have dealt with drought in some of South Africa's wine regions and wildfires in others, and some say climate change could continue to complicate an already unpredictable climate.
For a long time, South Africa's wines have fought hard to compete with their Old World rivals in terms of reputation globally.
But this is slowly changing, as quality wines from the region are gaining recognition, and the industry continues to grow.
 The Western Cape is responsible for most of the nation's wine making, with Constantia and Stellenbosch (pictured) the most famous areas within the region.

At the country's annual Nederburg auction in September, prices per litre for the wines on sale hit an all-time high, with red wines seeing a 50% increase in the average price.

The industry has seen a boost over the past 10 years, and it is predicted to keep growing, according to a recent report by the Bureau for Food and Agricultural Policy.

Global exports increased from 151.6 million liters in 2000 to 423.5 million liters in 2015. This is projected to increase by a further 13% by 2025.
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Foreign investors such as Richard Branson and French wine giant AdVini are buying up vineyards in South Africa as the country's quality wines gain ground on the global market, with quality reds such as Cabernet Sauvignon taking the lead.
While a large amount of wine is exported around the African continent, producers in South Africa are increasingly looking towards the U.S. and Asia as their target export markets. The Chinese are among those who are warming up to the South African flavors, and in 2015 exports to China jumped by 40%.
South Africa is home to around 100,000 hectares of vineyards employing 300,000 people. The industry makes up 2% of GDP.
Wine was first planted here by European settlers in the 17th century. The oldest fruit-bearing vine in the Southern Hemisphere is located in Cape Town, a Crouchen Blanc planted in around 1771.
One aspect that sets South Africa's wine industry apart is the ubiquity of ethical accreditations. It is the largest producer of Fairtrade wine -- accounting for two-thirds of global sales.
Some organic producers take this one step further, by using ducks to keep their vines in shape as seen here in Paarl, 31 miles from Cape Town. The ducks patrol the long rows of vines in the hunt for snails. Predatory wasps and beetles are also released to tackle mealy bugs which feed on plant sap.

The industry produces a mix of grape varieties. Chenin Blanc and Colombard, its close cousin, are the most popular whites produced, while Cabernet Sauvignon is the favorite among the reds.
In terms of New World varieties, Pinotage, a cross between Pinot Noir and Cinsaut, is the most notable.
The industry may be be predicted to grow, but there could be trouble ahead. In recent years growers have dealt with drought in some of South Africa's wine regions and wildfires in others, and some say climate change could continue to complicate an already unpredictable climate.
For a long time, South Africa's wines have fought hard to compete with their Old World rivals in terms of reputation globally.
But this is slowly changing, as quality wines from the region are gaining recognition, and the industry continues to grow.
The Western Cape is responsible for most of the nation's wine making, with Constantia and Stellenbosch (pictured) the most famous areas within the region.
At the country's annual Nederburg auction in September, prices per litre for the wines on sale hit an all-time high, with red wines seeing a 50% increase in the average price.
The industry has seen a boost over the past 10 years, and it is predicted to keep growing, according to a recent report by the Bureau for Food and Agricultural Policy.
Global exports increased from 151.6 million liters in 2000 to 423.5 million liters in 2015. This is projected to increase by a further 13% by 2025.

Foreign investors such as Richard Branson and French wine giant AdVini are buying up vineyards in South Africa as the country's quality wines gain ground on the global market, with quality reds such as Cabernet Sauvignon taking the lead.

While a large amount of wine is exported around the African continent, producers in South Africa are increasingly looking towards the U.S. and Asia as their target export markets. The Chinese are among those who are warming up to the South African flavors, and in 2015 exports to China jumped by 40%.

 Koegelenberg agreed to sell its 100-ton wine cellar and 25 hectares of vineyards on its Val de Vie Estate to Perfect China. As a result, L'Huguenot now exports three South African brands to China -- L'Huguenot, Leopard's Leap and La Motte.
With a history of winemaking dating to the 1600s, the company came up with a strategy of hosting wine tasting events in hotels and high-end restaurants in China. And it paid off. Koegelenberg says he currently exports 3 million bottles to China every year, up from 1.5 million in 2012.
South Africa is the eighth-largest wine producer in the world and the emphasis is on classic mid-range products that would suit the Chinese market -- already the world's largest consumer of red wine, surpassing France and Italy since 2014.
 
Vineyards in South Africa are under pressure from climate change impacts.

Wine in South Africa
8th largest wine producer in the world

Began producing wine in 1659

100,000 hectares of vineyards

3,300 producers

Contributes 2% to GDP

Employs 290,000 people

Exports up 5% in 2017

Produces 4% of world's wine

Industry worth 36 billion rand ($2.5 billion)
The company has had to work hard on promoting South African wine to Chinese customers. Renier Van Deventer is head winemaker at L'Huguenot and Leopard's Leap.
He says the Chinese palate is very different to South Africa's. According to him, the company had to come up with notes "to match China's spicy and tangy cuisine."
"We did a lot of research in China and bringing Chinese clients to taste wines in South Africa with us," says Deventer. "The main feedback that we get stylistically for the wine is that they enjoy the smell of oak but then they want smooth soft fruit juices on the palate."
China's wine imports jumped more than 30% this year and the trend will likely continue. From January to March this year, China imported 200.57 million liters of wines worth around $792 million -- a year on year growth of 32.34% in volume and 35.84% in value, according to figures by the China Association for Import and Export of Wine and Spirits (CAWS).
But L'Huguenot faces competition from France, which is the largest wine exporter by value globally and tops China's wine imports country of origin.
"French wine, they've dominated (the) Chinese market for a long time, they have some big brand names in China," says James Tan, CEO at L'Huguenot Vineyards.

But he says he thinks South Africa has fought hard to match French brands with some unexpected advantages.
"They are facing a lot of challenges because in China there are fake big brands and the Chinese cannot tell the difference," says Tan. "We're very fortunate with South African wine -- we have the seal of origin, a certification that can guarantee what you see on the label is what you get."
The South African wine industry is broadly under pressure from climate change. In recent years, production has been hit by wildfires and the worst drought in a century.
China's high tariffs also make success in its markets an expensive venture.
"You pay a 49% tax in China when you import wine there," says Koegelenberg.
 
L'Huguenot sold its cellar and 25 hectares of vineyards to a Chinese company.
"That's a big challenge which is unfair to the South African wine industry because there are some countries in the world that can escape or go without import duties," says Tan.
Despite this, South African wines are gaining ground. Around 13,000 stores now stock L'Huguenot wine, with around 1,500 salespeople hosting wine parties within China to expose consumers to its new vintages, Koegelenberg says.
"We come from a bad history where we couldn't plant in all regions," says Koegelenberg, referring to South Africa's era of apartheid. "Now we are planting. So all of a sudden winemakers in South Africa are making excellent wines."


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