Pieter Terblanche glances at the latest order from his Shanghai sales team: wine labels featuring an exotic menagerie of tigers and other wild animals from an imaginary Africa. He calls them the "critter brands" – but admits they help his wine to sell nicely in China.
"Critters are working," he muses as he surveys the labels. He had to replace the tigers with cheetahs because there aren't actually any tigers in Africa, but otherwise the wild-animal designs are another successful foray into the fast-growing Chinese wine market.
In South Africa, as in many other wine-producing countries, China represents the future. Squeezed by low margins and tough competition in Europe and North America, wineries are turning to a fledgling market that could expand swiftly as Chinese wealth increases and its consumer class grows. And the strategy seems to be paying off: South Africa's wine sales to China soared by 63 per cent last year.
Mr. Terblanche is head of global sales and marketing at Swartland Winery, the latest South African winery to pursue the China dream. Electronics entrepreneur William Wu, a Chinese immigrant to South Africa, purchased 51 per cent of the winery in December and immediately announced plans to target Chinese consumers as they develop a taste for wine for the first time in their history.
"My decision to invest in Swartland Winery was driven by the fact that I am coming to the winery with a market for the product," said a statement by Mr. Wu, who declined to be interviewed. "The market is in China, where I have a ready demand for the quality and volume of wine Swartland produces."
He had earlier invested in a smaller nearby winery, Veenwouden, before acquiring Swartland, which he described as a "great investment" because it is "one of the few South African wineries of this size where the majority of grapes planted are red varieties – in which the Chinese market is most interested."
Last year, after several years of spectacular growth, China became the world's biggest market for red wine – bolstered by the fact that red is the unofficial national colour, considered a symbol of wealth and good fortune. Over all, in all colours of wine, China is the world's fifth-biggest market. Sales growth has recently slowed because of an anti-corruption crackdown that has reduced "gift-giving" of luxury products, but China's wine consumption is still expected to grow by a robust 25 per cent from 2014 to 2018.
France, which has always dominated the Chinese market, currently supplies 45 per cent of China's wine imports, while South Africa supplies only 3 per cent. But the South African industry is confident of dramatically boosting its sales to China over the next few years.
Thousands of Chinese tourists are now visiting South Africa's wine lands every year, and Chinese translations have been added to the signboards at several wine estates here. One producer brings hundreds of Chinese wine salespeople on annual promotional vacations to South Africa, where they even spend a day harvesting and sorting grapes as an educational immersion in the industry.
South Africa's wine industry association set up its first office in Hong Kong last October, and South African wine tastings and wine exhibitions are being held in Beijing and Shanghai.
Swartland, which processes about 28,000 tonnes of grapes annually, is one of South Africa's 20 biggest wineries. Despite its 67-year history as an independent winery, the 63 wine farms that supply Swartland voted 94 per cent in favour of Mr. Wu's purchase. "There's been a big change in mindset," Mr. Terblanche said in an interview. "We can't just stay in South Africa. I believe there will be many more of these deals in the next few years."
Frans Maritz, chairman of Swartland at the time of its acquisition by Mr. Wu, said the deal "will allow Swartland to unlock value for our member farmers with new markets in China." He predicted that the "energy and insight" of his new Chinese partner will "rejuvenate the Swartland brand."
Another South African winery, Leopard's Leap, has doubled its sales to China over the past three years, becoming the biggest single South African wine exporter to China with about three million bottles sold last year. It created a joint venture with a Chinese firm, Perfect China Ltd., to buy a South African vineyard and create a brand called L'Huguenot, designed specifically for the Chinese market.
Knowing the popularity of French wines in China, the joint venture decided to capitalize on the Huguenot heritage of the wine farms around the South African town of Franschhoek ("French corner"), where many French Protestant refugees settled in the late 17th and early 18th centuries to escape religious persecution.
"I'm not selling a commodity, I'm selling a brand, so I'm selling a story to go with it," says Hein Koegelenberg, chief executive of Leopard's Leap.
He recalled the advice from his Chinese partner when they decided to create a brand for the Chinese market: "He said it must look French."
They were also aware of the crucial importance of food in Chinese culture, so they designed their own vintages for different Chinese food, including a Chenin Blanc for the seafood favoured in the coastal and southern regions of China, and a Shiraz-Pinotage red blend to complement the spicier food of the inland regions.
South Africa's wine industry directly and indirectly employs about 290,000 people and contributes about 1.2 per cent of the country's gross domestic product, according to the industry. But with help from burgeoning sales to China and other new markets, the industry has the potential to create an additional 100,000 jobs over the next decade, industry studies say.