Australian Vintage to expand in China with COFCO deal

McGuigan wines producer Australian Vintage is set to bolster its presence in China after signing a long-term distribution deal with Cofco, the state-owned food and drink conglomerate.

The deal will see Cofco promote the McGuigan wine brand as a part of its ‘Ming Zhuang Hui (Grand Cru Collection)’ range through its national distribution network, both online and offline.

The move could give Australian Vintage a competitive advantage over its rivals from Australia and further afield. The news comes after Penfolds owner Treasury Wine Estates and Jacob’s Creek owner Pernod Ricard both reported weaker wine sales in China, amid government austerity measures.

Some industry commentators believe China’s imported wine market showed early signs of recovery in the second quarter of 2014.

Australian Vintage’s chief executive, Neil McGuigan, said his producer’s commitment to the Chinese market is ‘stronger than ever’. China accounts for 5% of the group’s sales at present.

‘We have been strategically patient in finding the right partner for China-wide distribution,’ Cameron Ferguson, Australian Vintage general manager, told DecanterChina.com.

‘We’ve taken our time focusing on essential details, such as trademark and broader brand protection, in order to avoid some of the pitfalls our competitors have experienced of late.’ Treasury Wine Estates is currently fighting a legal battle over the rights to the Penfolds brand name in China.

Cofco as one of China’s major food and oil importers and producers, has been expanding its imported fine wine business. It has recently signed distribution deals with Bordeaux’s Moueix Family and Chile’s Concha y Toro.

'Custom import figures show that Australia is China’s second biggest source of imported bottled wines in 2013.’ Li Shiyi, General Manager of Cofco's imported wines & spirits division, told DecanterChina.com, ‘New world wines represent fashion, creativity and change, which are attractive concepts and qualities to urban Chinese consumers. The typical fresh, fragrant and sweet flavour characteristics brought by Australian terroir are also close to the preference of Chinese consumers.’

‘We can see great potential for growth in renowned Australian wine brands,’ He said.

Ferguson said he was confident in the McGuigan brand’s ‘solid mix’ of wines at different prices and in different styles. ‘If we get the message right, focus on our quality and education together with a solid marketing and sales plan, the sales will come,’ he said.