China wine stats | ‘If Penfolds were a country, where would it rank?’

China wine veteran The Cellar Rat posed an intriguing query recently as I wrote up some China wine import stats.

“If Penfolds were a country, where would it rank?”

(He also added, in time for Halloween, “The over-reliance of Penfolds for the Australian wine category is scary.”)

Let’s try to answer The Cellar Rat’s query. And, given reliable stats are hard to find, remember this is speculative.

Neither TWE, which owns Penfolds along with many other brands, nor Wine Australia gives stats on the company’s exports to China, at least not to me. But sources familiar with the numbers peg the TWE share of Australia’s total at 30% to 40% by value and 10% to 15% by volume. Let’s use the mid-points of 35% by value and 12.5% by volume.

Given China import data from January to August 2019, TWE represents 10.3 million liters of Australia’s 82 million liters of bottled wine. That would rank it sixth in the market, with double the volume of the United States or Portugal, and 40 percent of Italy’s share. That’s also as much as South Africa, Argentina and Germany combined. Australia imports, without TWE, would also fare well and remain a strong second behind France.

That’s pretty impressive. But nowhere as impressive as the value story.

A 35% slice of Australia’s USD 553 million in sales to China totals a cool USD 194 million. (Yes, all that Penfolds Grange and Bin Whatever does add up.) That’s the same revenue as Chile, roughly double Italy or Spain and eight times more than the United States. Only France, and Australia without TWE, have more. A key side effect is Australia’s value per bottle drops significantly once you remove TWE from the equation.

So, given those volume and value numbers, TWE easily ranks at nation level when it comes to wine in China. And Penfolds Nation is a notably strong one.

Since I calculated these numbers, there was some debate about a claim made by Ian Ford at Vinexpo Shanghai that Penfolds represents 66% of Australia’s bottled import value to China. Ford says it’s based on the first six months of 2019 and calculated using customs import stats, both by brand and item.

Others wonder how the number can possibly be that high, especially given past data, warehouse capacity and their gut feelings. I’m going to do a separate post on this but, just for fun, let’s plug that 66% into our data from above. (I’m using my eight-month data because it’s already really late and it’ll be easier.) Here we go:

Crikey. That gives Penfolds three-quarters the value of France. And as much value as Italy, Spain, the US, Portugal, Argentina, South Africa and Germany combined, with USD80 million to spare. Plus double all the rest of Australia, a dependence The Cellar Rat has noted as scary.

Is that number accurate? I guess we shall see! More on TWE / Penfolds soon. And if you find this and other posts on Grape Wall useful, please consider helping support this site — this is the time of year hosting fees come due — via Paypal or Wechat.

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