Treasury entertains hopes of tempting Chinese tastebuds
An online article in the Wall Street Journal quotes Treasury Wine Estates chief executive David Dearie as speculating that the Australia wine producer plans to unveil wine outlets across China in the next three to five years.
Last week, Mr Dearie and the Treasury Wine Estates board toured China and Singapore to get a better understanding of the Asian market, which is expected to grow at double-digit rates in the coming years as more mature markets, such as North America and Europe, struggle in the face of a wine glut and recessionary conditions.
Research firm Euromonitor International reported sales of wine in China hit $US41 billion last year, up 20 per cent from a year earlier.
Treasury Wine Estates' aim is to use its own venues as a tool to help Chinese consumers learn more about wine, and drink more of it.
"If you're going to make great wine and be a leading brand in China, you also have to be consumer-oriented," Mr Dearie is quoted as saying in the Wall Street Journal article.
Mr Dearie said Treasury Wine Estates was working with one of its distributors to open a 6000-square-metre wine gallery, for tasting events, in Shanghai.
In 2012-13, the company posted a wine volume growth of 31 per cent in Hong Kong and China combined, with net sales revenue up 29.5 per cent for the year. The growth is still off a small base, however total Asian sales for the wine group already account for 20 per cent of total pre-tax earnings.
Mr Dearie has targeted China as a source of premium growth for Treasury Wine Estates and has directed a greater slice of the company's top wines, such as Penfolds Grange, to the region.
But like most winemakers it is struggling to overcome the cultural differences and consumer attitudes towards various wine styles and blends. Opening wine bars in China could help Treasury Wine Estates better understand and target the Chinese consumer.
Mr Dearie told the Wall Street Journal higher-quality import wines were often given as gifts between businessmen to be stashed in cellars rather than drunk. The company hopes that with wine bars or restaurants it will encourage consumption of the wine.
He said the move towards entertaining has not been influenced by China's recent austerity campaign, which led to a ban on government banquets and a flow-on affect on wine sales.
Liquor giant Diageo recently opened its second bar in China, and executives have said its Johnnie Walker Houses have been successful in helping the company identify its VIP consumers, while bolstering the brand and profits.
Treasury Wine Estates is also increasing its presence at duty-free shops where it is holding tastings, so Asian tourists in particular can learn more about premium brands, Mr Dearie said.
Frequently Asked Questions about this Article…
Treasury Wine Estates is exploring opening wine bars, restaurants and entertainment venues across China over the next three to five years. The company plans to use its own outlets — including a proposed 6,000‑square‑metre wine gallery in Shanghai with a local distributor — to educate consumers, host tastings and encourage people to drink imported wines rather than just buy them as gifts.
Research firm Euromonitor reported Chinese wine sales reached US$41 billion last year, up about 20% year‑on‑year. The article notes Asia is expected to grow at double‑digit rates, making it an attractive area for wine companies seeking premium growth as more mature markets like North America and Europe face oversupply and slower demand.
In 2012–13 Treasury reported wine volume growth of 31% in Hong Kong and China combined, with net sales revenue up about 29.5% for the year. The company says total Asian sales already account for roughly 20% of its total pre‑tax earnings, although that growth is off a relatively small base.
Yes. CEO David Dearie has targeted China as a source of premium growth and has directed a greater share of the company's top wines — including Penfolds Grange — to the region to capture demand for higher‑end imported labels.
The company believes owned venues and tastings will teach Chinese consumers about wine styles and blends, shift behavior away from keeping imported wines as gifts in cellars, and encourage people to drink them. The approach mirrors liquor rivals like Diageo, whose Johnnie Walker Houses have helped identify VIP customers and boost brand engagement.
According to CEO David Dearie, the push toward entertaining (wine bars, restaurants and galleries) has not been influenced by China's austerity campaign. While the campaign led to a ban on government banquets and affected wine sales in some channels, Treasury says its entertaining strategy is a consumer‑oriented growth play.
Besides venues, Treasury is increasing its presence in duty‑free shops and holding tastings so Asian tourists and travellers can learn about premium brands. The company is also working with local distributors to stage events and open larger experiential spaces like the planned Shanghai wine gallery.
The company faces cultural differences and varying consumer attitudes toward wine styles and blends, plus a tendency for higher‑quality imported wines to be purchased as gifts and stashed rather than consumed. These factors make education and targeted consumer engagement — via bars, tastings and experiential outlets — central to its China strategy.
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