Winemaker in push to lift Asian consumption

Treasury Wine Estates, the world's largest pure-play winemaker, is toying with the idea of opening bars, restaurants and entertainment venues in China as part of a strategy to win over drinkers in the region.

Treasury Wine Estates, the world's largest pure-play winemaker, is toying with the idea of opening bars, restaurants and entertainment venues in China as part of a strategy to win over drinkers in the region.

An online article in The Wall Street Journal quotes Treasury Wine Estates chief executive David Dearie as speculating that the company plans to unveil its own wine outlets in 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 coming years as more mature markets, such as North America and Europe, struggle in the face of a wine glut and recessionary conditions.

According to research company Euromonitor International sales of wine in China hit $US41 billion in 2012, up 20 per cent from a year earlier.

Reportedly, Treasury Wine Estates' aim is to use company-owned drinking venues 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 report.

Mr Dearie said Treasury Wine Estates was working with a distributor to open a 6000-square-metre wine gallery, for tasting events, in Shanghai.

In 2012-13 Treasury Wine Estates posted 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 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 still struggling to overcome the major cultural differences and consumer attitudes towards various wine styles and blends. Opening company-owned and run wine bars in China could help Treasury Wine Estates to better plug into the mind of the Chinese consumer.

Mr Dearie reportedly 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 with wine bars or restaurants it will encourage consumption of the wine.

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