China’s Summergate importer acquired by Australia’s Woolworths

One of Australia's largest wine retailers, Woolworths Liquor Group, has acquired the Summergate wine import business in China for an undisclosed fee.

Woolworths has also acquired Summergate's sister firm, Pudao Wines, in what is a major overseas investment for the retailer, which has traditionally focused on Australia and New Zealand.

Summergate has spent the past year looking for an outside investor and its chief executive, Ian Ford, told DecanterChina.com that the deal 'brings a lot of capital to the business'. He declined to disclose specific financial details, but said that he would remain in charge and the current company structure would not change.

'I have every intention of staying on and running the business for a very long time,' he said at the inaugural Decanter Shanghai Fine Wine Encounter on 29 November.

Summergate is one of China's best-known fine wine importers. According to its website, it currently distributes wine in China for Chile's Concha y Toro, as well as France's Pol Roger and Gerard Bertrand and Italy's Barone Ricasoli, among others.

The deal comes amid a transition period for wine in China. Imports of foreign wines have stuttered following the government's decision to curb gift giving by officials.

'What we are seeing now is real consumer consumption,' said Ford. 'This year, we are up 28% in terms of revenue growth in the off-trade [including eCommerce].' Perrier, the sparkling water brand, has helped to drive sales, alongside wine.

The timing of the deal means Woolworths may also take advantage of Australia's free trade agreement with China, announced last month. China has agreed to abolish import tariffs on Australian wine within four years.

Ford said Woolworths was putting 'substantial funding' into Summergate, after 15 years of organic growth at the Shanghai-based importer.

'There are also tremendous synergies with Woolworths Liquor Group and its family of companies in terms of customer relationship management, logistics and supply chain management. They move a lot of product across a very big territory, which is a big challenge for us here. So we are going to benefit from their expertise.'

Ford added, '2015, for us, with distribution all over the China with well-priced brands that have real demand, will a very big year.'

He said he hadn't expected to sell 100% of the business when Summergate began searching for an investor, but is 'extremely happy' with the Woolworths deal.

'I don’t think there could have been a better outcome for us. We have talked to a lot of people, ranging from venture capital, financial institutions, private money and Chinese companies, and we are totally thrilled with this outcome.'

Summergate co-founder Brendan O'Toole will also stay on as a board member, following the deal.

Additional reporting by John Stimpfig