Since the opening up of the Chinese market in the towards the end of the last century, despite the launch of over 6,000 importers by 2016, distribution of premium wines largely remained in the hands of foreign-owned businesses. The pioneers were Montrose Food & Wine, founded in 1988 by US-born David Henderson, followed by Don St Pierre Snr and Jnr’s ASC in 1996, Torres China the following year, Summergate in 1999 and Edouard Duval’s EMW – East Meets West – in 2003.
A majority stake in ASC was sold to Suntory in 2009 while the Australian retailer Woolworth acquired Summergate, distributor of local brand-champion Penfolds, in 2014.
The rationale behind this overseas ownership was simple: most premium imports were sold in western-owned, or at least western-focused, hotel chains, often to expatriates, visiting businesspeople and tourists. If the F&B directors and sommeliers of these establishments liked dealing with knowledgeable westerners and companies with temperature-controlled warehouses, so too did many of the growing number of Chinese who were buying cru classé Bordeaux. As exclusive importers, the western-owned businesses also offered a guarantee of authenticity; until 2011, for example, Summergate were the only importers of wines from DBR Lafite.
Giant Chinese alternatives
There were two large Chinese alternatives to this model: the government-owned COFCO, the country’s biggest food processor, manufacturer and trader whose website describes it as dealing in “grain, oil, sugar, cotton, meat, dairy products, etc… [with] food, finance, and real estate as three major complementary business segments.” And Xiamen C&D International Wines & Spirits Group, a subsidiary of the publicly listed ‘supply chain operations and real estate development’ giant Xiamen C&D whose overall operations brought in 2022 revenues of RMB 832.81bn ($116bn).
These domestic businesses went almost unnoticed by many premium western producers, but C&D, in particular, prior to 2011, bought significant volumes of top Bordeaux while providing brands like Gallo and Castel with invaluable distribution beyond western-focused outlets in first-tier cities. In 2016, as Grape Wall of China author, Jim Boyce, reported, while the biggest foreign-owned importer, ASC shipped 8m bottles, C&D imported twice that many.
Other Chinese companies were growing too. Nanpu, importer of the Gallo-owned Carlo Rossi brand, and the big producer Changyu which shipped Grands Chais de France wines, often under its own labels, both snapped at ASC’s heels, bringing in around 7m bottles apiece. By comparison, Summergate and Torres each only shipped around 3m.
Over the following years, even before Covid and the impact of tariffs on Australian imports, volumes shipped by the foreign-owned companies fell, as did those of some Chinese ones. Then came Covid. In 2020, for example, as Vino-Joy reported the pandemic saw the closure of Joyvio, a subsidiary of the computer manufacturer Lenovo, with the loss of over 400 retail shops.
Against this background, and of a shrinking Chinese market, one business has grown. Within three years of its launch in Beijing in 2014, Wajiu was already bringing in 13m bottles and claiming to be ‘China’s largest wine importer by volume’. In 2018, it claimed – in a Decanter advertorial presumably aimed at western producers – to be listing 2,000 different wines from over 500 wineries” including Bernard Magrez and Boisset in France, Spain’s Codorníu and Freixenet, GIV from Italy, Viña Errazuriz and Concha Y Toro in Chile, Australia’s Pacific Vintners and Peñaflor from Argentina.
Other attractions for premium brands were “more than 50,000 square meters of temperature- and humidity-controlled warehouses – some situated in tariff-free zones” and “logistics distribution covering more than 3,000 transport routes in China”. In a highly complex market, there was also a trained 200-strong sales team “help with the marketing and promotion of foreign wine brands, responding to consumer trends in the local market and developing targeted strategies to help wineries access the most suitable sales channels.”
Summergate goes Chinese
Earlier this year, following announcements by Woolworths that it might be planning to close Summergate after losses of AU$30 ($20m), Wajiu acquired the business for an undisclosed sum. Now, just a few months later comes the news – again via Vino-Joy – that Summergate will, in turn, acquire Torres China. A joint press release issued at the signing ceremony states that the deal will “drive the next stage of imported wine business in China.”
Natalie Wang of Vino-Joy speculates that the acquisition of two of the best known foreign-owned importers – and their distribution agreements with a long list of top international wine brands – sets Wajiu up for a potential IPO.
For optimists, this could happen at a time when the Chinese wine market begins to re-emerge from the doldrums. Whatever the future may hold, however, one thing is clear, the adventure launched 35 years ago by David Henderson, of a western-controlled market for premium wine distribution in China, is over.
Just a few weeks before the announcement that the second of the biggest competitors to ASC, the company he and his son founded in 1996, Don St Pierre Snr died of cancer. He was 82. As Natalie Wang reports in this obituary, under his and his son, Don Jnr's leadership, ASC deserved Robert Parker's description as “the greatest wine distributor in China”