China will be NZ's biggest wine market

China's thirst for red wine is pressuring supplies from New Zealand and one New Zealand winery has sold out of its premium Hawke's Bay labels.

Babich Wines general manager David Babich said the company's total premium label production was spoken for this year because of the growing Chinese market.

"That's not something we've had from year to year."

His comments come as new figures show cabernet merlot exports to China passed the one million litre mark for the first time in 2012, a 50 per cent increase on the previous year.

The Chinese are red wine drinkers, and of New Zealand's total $25 million in wine exports to China in the year to June, $10m was cabernet merlot.

Given New Zealand is primarily a sauvignon blanc exporter, the growing demand from China is proving a boost for red wine producing areas such as Gimblett Gravels in Hawke's Bay.

Gimblett Gravels Wine Growing District chairman Tony Bish said China was expected to overtake Britain as New Zealand's biggest market for cabernet merlot next year, and by 2014 one in every two bottles of the style was likely to be going to China.

As Hawke's Bay produced 85 per cent of New Zealand's cabernet sauvignons and merlots "it's very much a Hawke's Bay opportunity".

"There's a lot of optimism that there's significant potential for medium and high-priced wines in China."

At the moment a lot of Gimblett Gravels' production was going into grocery-priced bottles of wine at under $20, Bish said. But it had proved its quality internationally, and it now needed to build its brand.

"The opportunity is to trade up. A good 80 per cent of what we're producing should go out at premium price points."

Babich said three years ago China was his company's 20th largest export market but was now its third largest. "A fire has been lit under China with regard to supply of New Zealand wine."

The main driver of its China business was Hawke's Bay reds, in particular the Bordeaux styles of Gimblett Gravels. Babich had expanded its red grape plantings in the region and bought another small vineyard there, he said.

Villa Maria has recently bought 100 hectares of vineyard land in Gimblett Gravels. Its Asia Middle East market manager Charlotte Read, who is based in China, said the company had been exporting there for 12 years and mostly sold sauvignon blanc, but reds other than French were starting to gain momentum.

"The Chinese like to buy quality and like to buy brands. The opportunity for Gimblett Gravels is if they can create a really strong brand for themselves as being the elite of what New Zealand offers, there's a big opportunity."

New Zealand Trade & Enterprise [NZTE] and industry body New Zealand Winegrowers are currently running a joint programme of promotions to boost the Chinese market.

Last week NZTE hosted Chinese wine expert Li Demei on a roadshow around the country to help foster cross-market understanding of New Zealand wine and its potential in China.

Li, a winemaker, commentator, and professor in the Food Science Department of Beijing University for Agriculture, said New Zealand needed to target the high end of the market.