Wine to Malaysia

(Last updated: 10 Nov 2008)

Trends and opportunities

The market

Since 2001, Australia has overtaken France in its export of wine to Malaysia. Currently, there are 5.8 million litres of wine exported annually to Malaysia, with Australia supplying 2.5 million litres of the total import.

Traditionally, brandy has been the most popular alcoholic beverage in Malaysia, followed by whisky and wine. Factors attributing to Malaysia’s growing wine market include:

• The lifestyles of an increasing number of affluent, sophisticated and well-travelled consumers. Wine is becoming a symbol of cultural refinement in Malaysia
• A sizeable expatriate community
• An influx of tourists
• The emergence of a large number of younger wine drinkers who regard the consumption of wine as being modern and upmarket
• The rise in the number of women drinkers with most preferring white wine to red wine
• The consumption of wine has become more affordable and is perceived to be a healthier choice when compared to hard liquor, such as brandy or whisky

The increasing awareness of wines is as a result of:

• The regular showcasing and promotion of food-producing countries by five-star hotels in which wines are often one of the main items featured.
• Wine-tasting sessions by winemakers brought in by local wine import agents. Invariably, this has led to a growing request for formal wine classes with some preferring these sessions to be at a certificate or diploma level.
• Regular wine articles in the local media.

The consumption ratio between red and white wine is 80:20. Red wine is gaining popularity due to favourable publicity by local press and media emphasising its health benefits.

Opportunities

There is a growing market for wine in Malaysia. Many Australian brands have established their presence in Malaysia and there is opportunity to increase the range including:

• dry red table wines 
• dry white table wines
• sparkling wines
• fortified wines

Competitive environment

Currently, cheap range wines (retailing between RM35.00–RM50.00) is dominated by the New World wines (Australia, Argentina, Chile and South Africa).

Mid-price wines (RM60.00–RM110.00) is dominated by Australian and Chilean wines. However, there is trend shifting towards South African wines, as they are offering good value wines within the range. This is a growing segment within the market.

Premium price wines (RM110.00 and above) is mainly dominated by the Old World producers and selected wines from Australia and Chile. Australian exporters have difficulty penetrating this segment as it is a segment mainly dominated by mature drinkers. Mature drinkers tend to shift towards Old World wines once they have acquired the taste of New World wines.

Tariffs, regulations and customs

Presently there are no import quotas or restrictions imposed by the Malaysian Government on wine and brandy. All liquor shipments entering the country are subject to customs clearance and duties. It is normal for the Royal Customs and Excise Department Malaysia to take one bottle from each case to assess the alcohol content, thereby affecting landed prices.

Local importers must obtain an import licence from the Royal Customs and Excise Department. All relevant shipping and negotiable documents, including the pro-forma invoice, bills of lading and packing lists should be forwarded to the importer immediately after shipment.

Current import duty for still wines in containers holding two litres or less is RM7.00 per litre and a 15 per cent Valorem Tax on the CIF + import duty value. Additionally, there is an excise duty of RM12.00 per litre. At the end there is an additional five per cent sales tax on the total value.

The Department of Public Health Malaysia legislates guidelines pertaining to labelling including the design and content of labels and the contact details of the importer. The label must include the following information:

• The specific description of the product
• The alcohol content stating the words ‘ARAK MENGANDUNGI - % ALKOHOL’
• The primary ingredients used in production

A font size of 12 points must be used to inform Muslims, as non-alcoholic sparkling grape juice and other fruit juices are packaged in similar bottles.

Industry standards

There is no large-scale, domestic production of wine in Malaysia, therefore no industry standards for wine exists.

Marketing your products and services

Market entry

Entry into the Malaysian wine market is fairly difficult as there is resistance among existing major distributors to take on additional agencies. Major players are sole agents for most leading brands of Australian and European wines. Marketing representatives are employed fulltime to cover the sectors of the food service and retail trade. Distribution does not necessarily involve agency appointment.

Some recommended strategies for entering the Malaysian wine market include:

• Pre-entry study of the targeted market (be informed of customer’s needs).
• Adopting a niche approach by starting small, but in a sustainable way.
• Considering working with other Australian food exporters to optimise usage of container space by consolidating shipments.
• Going for a medium-sized importer. Such an entity would have a greater sense of commitment, as the inventories are small but growing.
• Considering promotional efforts of your prospective importer (type of events eg. wine tasting). These parameters would give you a good feel of the seriousness and capability of the potential importer in effectively promoting your wines in Malaysia.
• Being committed to a greater presence with funds to support and build brand presence in your key wine markets. This is a test of the supplier’s intent and whether they are serious or not.

In order to appoint the appropriate distributor, the exporter has to ascertain the Malaysian wine importer’s marketing approach:

• Volume sales: Importers with interest in large volume wines for distribution through retail or food service outlets. Some of these importers may also import boutique wines to expand their range of wines.
• Niche markets: Importers with interest to concentrate in the niche market such as restaurants or hotels. These importers are interested in small but sustainable volume of boutique wines or dessert wines.

Promotional efforts include:

• Helping the importer to be proactive in promoting your wines at wine tastings or to run seminars.
• Making promotional materials available (provide novelties, where possible) to showcase your wines at major hotels.
• Encouraging the importer to liaise with local media to feature your products in tabloids and industry-specific magazines (eg. ‘The Edge’, ‘Hospitality Asia’, ‘Malaysia Retailer’ and ‘Beverage Today’).
• Participating in the major industry related trade fair - Food and Hotel Malaysia, Kuala Lumpur. The event is supported by Austrade Kuala Lumpur and the event organiser is Malaysia Exhibition Services.
• Meeting with major Malaysian food and beverage importers who visit Fine Food Australia, an annual event held in Australia.

Distribution channels

Some channels that you may wish to explore include:

• Major wine import houses import and distribute on a wholesale basis to institutional retailers and end-users.
• Medium-sized wine importers distribute on wholesale basis to institutional retailers or have an in-house market to walk-ins.
• Online sales – sells primarily to individual end-users. A strategic prerequisite of online selling is the need for fast deliveries and, if possible, proximity to the market.
• Separate agents for Peninsular and East Malaysia (Sabah and Sarawak) should be considered if Australian companies wish to distribute to the whole of Malaysia.

According to trade sources, on-premise sales attribute 60 per cent of the imported wine market, with the remaining 40 per cent contribution from the retail sector. The on-premise sales are mainly through people dining in restaurants, hotels and patrons at entertainment outlet.

Wines sold in the retail sector (supermarket) are mainly wines in the cheaper range, but there is number of bottle shops in the country which caters to middle and premium market.

Transport

Most wines are shipped in Malaysia via Port Klang, the main port of entry of Malaysia. However, there are wines shipped to Penang as there are a few importers servicing the northern states of Malaysia.

Links and industry contacts

Wine–related resources

Food and Hotel Malaysia – www.mes.com.my
Fine Food Australia – www.ausexhibit.com.au
Malaysian Hotels Association – www.hotels.org.my
Food and Beverage Executives Association – www.mfbea.com.my

Government, business and trade resources for Malaysia

Department of Public Health Malaysia – www.moh.gov.my/fqc/index.htm

The Royal Customs and Excise Department, Malaysia – www.customs.gov.my
Block 11, Government Offices Complex
Jalan Duta
50596 Kuala Lumpur
Malaysia
Tel: +60 3 6201 6088
Fax: +60 3 6201 2548

Department of Statistics, Malaysia – www.statistics.gov.my
Block C6, Pusat Pentadbiran Kerajaan Persekutuan
62502 Putrajaya
Malaysia
Tel: ++60 3 8888 9248