By Jim Boyce
It’s a bumper harvest this year for China wine rumors. This month’s is that Chilean heavyweight Concha y Toro bought a 50-percent stake in China-based wine importer and distributor Summergate. Concha y Toro has been a cornerstone of the Summergate portfolio, especially as major accounts Antinori and DBR Lafite left in 2012 and 2010 respectively, the latter said to part ways after being unable to invest in the distributor. While Summergate founding partner Brendan O’Toole has relocated to the UK, fellow partner Ian Ford said last week that O’Toole remains involved as a non-executive shareholder and that no equity has changed hands. There is also no word from Concha y Toro re any investment. I’ll update if there are any updates / news re this situation.
Rumors on the health of importers and distributors are thick these days. Thousands of new players, often led by inexperienced managers, rushed to import wine over the past five years and found it far easier to bring in bottles than to actually sell them, thus, there is lots of stock on hand and lots of likelihood of dumping. Add the new wave of online retailers, who are battling for market share as much as for profit at this point, and a government crackdown on official spending that has seriously dented sales of high-end bottles, and there is plenty of market pressure. On top of this, as global players see their stakes growing in the China market, they want more control of their brands, which includes investing in established distributors — Suntory’s share in ASC is a prime example. Anyway, given all this, don’t expect the rumors to let up any time soon.
By the way, look for an interview with Ian Ford on his fifteen years experience in the China market in the very near future.