By Jim Boyce | Two huge alcohol brands are partnering in China—Australian producer Treasury Wine Estates and local baijiu giant Luzhuo Laojiao. Luzhou Laojiao will exclusively distribute TWE brands like Saltram and Penfolds Bin 138 as well as get the majority quota for China of Penfolds flagship wine Grange, according to this report from Yicai Global.
TWE hopes that it can see a surging sales growth in the Chinese market by taking advantages of Luzhou Laojiao’s high-end marketing channels, Peter Dixon, the Melbourne-based wine maker’s general manager for Asia, Middle East, Africa and Global Travel Retail, told Yicai Global.
Chinese consumers face a dizzying wine landscape of tens of thousands of brands handled by thousands of distributors, many of them small, regional and inexperienced. What Luzhou Laojiao offers TWE is one of China alcohol’s top brand names, a vast distribution network, and massive marketing and promotion clout.
I’m not sure if TWE also seeks “a new chapter in the integration of Eastern and Western cultures,” as Luzhou Laojiao chairman Zhang Liang was quoted as saying by Yunjiu Media, but it no doubt hopes to leverage a trusted brand, especially given recent cases of fake wine and other intellectual property issues facing its Penfolds label.
This month, police “busted two fake Penfolds workshops and six wine storage facilities with over 8,000 fake Penfolds valued at RMB 5 million” in Liaoning province, as reported in Drinks Business. This came on the heels of Wine Australia suspending exports of wine brand Daleford, with labels that evoke Penfolds, in part because “Daleford Wines has engaged in activity that aims to leverage from the reputation of another wine brand in China.”
Earlier this year, a warehouse raid in Zhengzhou, capital of Henan province, found some 50,000 bottles of knockoff Penfolds, stated Australian Financial Review. Other cases include 12,000 fake wines seized last November, Treasury Wines suing a “copycat” producer in China, an Australian wine critic explaining the difficulty telling fake from real wine apart in Shanghai, and social media talking about an extraordinarily high level of Penfolds wines in China are fakes, with Treasury reportedly refuting this.
Even so, TWE is making shitloads of money, with the China-led Asian market leading the way for the company.
In related news, Penfolds will soon released a hybrid wine and baijiu product.