Drinking our wine, here

China is now the New Zealand wine industry's fastest-growing export market.

Shipments to China increased by 180 per cent in the year to June, making it our sixth-largest export market, New Zealand Winegrowers said in its annual report, out this week.

Growth in the industry's traditional markets of the United Kingdom and Australia was bolstered by bulk wine sales, which now account for more than a quarter of total export volumes. This meant that the average price of bottled wine exports declined 11 per cent during the year. In contrast, this year's export story has been the emergence of Asia, says chairman Stuart Smith.

"Asia is now the continent where the highest average prices are achieved."

Even so, China is a small market compared with our top export destinations - the Australian market was worth $327 million last year, compared with China at $17.1 million - but it has huge potential for us, winemakers say.

Exports to China currently make up about 5 per cent of Wairau River Wines' business and the Marlborough winery hopes to double that in the coming year.

Developing the market has been a long road - Wairau has been dealing with its Chinese agent since 1995, says sales and marketing manager David Kenny.

One of the biggest issues was educating the market as Chinese wine drinkers were more familiar with top French reds than New Zealand whites.

"We're spending quite a bit of money on education with our agent, getting wines in front of people," said Kenny.

New Zealand wine exporters needed to concentrate on the "first tier" cities such as Beijing and Shanghai, as there wasn't the same sophisticated market in lesser cities.

They should also be careful who they deal with. Kenny says: "Since the introduction of the free-trade agreement [between New Zealand and China] we've seen a lot of fly-by-night cowboys come out of the woodwork and approach us."

However, David Jackson, general manager of Stonyridge on Waiheke Island, says it's amazing where such approaches can lead. The boutique winery's biggest individual client is a Chinese man. It has several such Chinese clients and some of this business has come about after young Chinese scoped out the winery for contacts back home.

Stonyridge has been working with these key clients for about five years and, in the past 18 months, its efforts are coming to fruition. Jackson says it is now also dealing with a couple of Chinese buyers to promote its Fallen Angel selection of New Zealand wine varieties.

China is Stonyridge's biggest export destination and it receives, on average, 10 inquiries a week about selling there. "If you look at any one market that's really just going at a vertical, it would be China."

Marlborough-based Jackson Estate's Chinese business is at a more embryonic stage but it has similarly high hopes.

Jackson Estate had been selling its wines through Watsons department store in Hong Kong for about 10 years and the retailer was now opening up branches in mainland China, said managing director John Stichbury.

China was "modernising, not Westernising". But the potential was huge - four million Chinese under 40 earned $21.3 million a year, Stichbury said, therefore New Zealand wine needed to be pitched as a premium product.

Roll out the barrels

* $1.4 billion in total

* Australia is our number one market at $327 million, followed by Britain at $298.6 million and the US at $211.6 million.

* Exports to China were $17.1 million, up from $6.1 million in 2009; made up of $10.8 million red and $6.3 million white wine.

- NZ wine exports to June