Australian winemakers are feeling the pinch of Beijing’s anti-corruption and austerity program as China’s demand for luxury goods runs dry.
Pernod Ricard, owner of Jacob’s Creek, the second biggest imported label into China has warned that beverage sales have been flat since the Lunar New Year.
According to the Sydney Morning Herald, Australian winemakers may have to wait until 2015 to see growth again in the Chinese market.
The austerity program has seen deputies and staff discouraged from exchanging gifts and the barring of expensive food, alcohol and other beverages from buffet tables at Parliamentary meetings.
The drop in market interest is felt by winemakers across the industry.
Treasury Wine Estates (TWE) recorded an 18 percent drop in the volume of wine sold in Asia due to China’s decrease in demand, a category decline in Singapore, and a change in Thailand’s alcohol tax.
TWE has responded to the drop in demand by saying they will stop supplying a number of luxury wines to China, and instead shift supply into other Asian markets.
Managing director of Clare Valley winemaker Taylors does not see the Chinese market improving for the next 12 months.
“I'm hearing reports of a lot of stock still in the market,'' Mitchell Taylor said. ''And I'm also hearing some of the restaurants and the on-premises venues are not as full as they previously had been.''
It’s not all bad news for winemakers, with Australian cellar sales of Pernod Ricard’s Mumm Cordon Rouge champagne increasing sixfold above the rest of the market.
Over the past financial year, the French champagne brand has surged 83 percent in in value terms, in contrast to the rest of the Australian market which has grown at a rate of 12 percent.
In response to market research, the popular winemaker has also recently redesigned its Jacobs Creek brand.
The research uncovered that most consumers did not know that Jacob’s Creek was a real place.
The redesign aims to correct these assumptions, and assert Jacob’s Creek as being founded by a family of winemakers and a family of grape growers.
These elements are represented in the new logo, which features a river flowing through a wine glass, cradled by vine leaves.