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Western Australia sets its sights on Asia
Western Australian wine producers are turning to the Asian market after a drop in local sales and exports.
Ferngrove has grown its Chinese exports by over 1,000% in the past 10 months after heavy investment in the company from Chinese businessman Xingfa Ma.
Last March, Ma invested AU$10 million in the company, buying up nearly three quarters of its shares through his food company Pegasus.
In January this year, he made a further offer to shareholders to buy the remaining shares in Ferngrove for close to AU$4 million.
In the past year, 80% of Ferngrove’s business has shifted from Australia to China.
Rather than selling wine through agents, the company has chosen to set up 30 wine retail showrooms in China as a base for a team of sales representatives.
“Not a lot of sales occur within the shop, it’s more of a billboard to say ‘this is us, we are here for the long haul,’” said managing director Anthony Wilkes.
“We’ve got around 40 sales people that use the shops as a base then go out to their contacts and sell the wine,” Wilkes added.
Close collaboration with the company’s Chinese shareholder has been crucial to their sales strategy.
“He’ll get our wines into places that we never could have imagined existed – a lot of the sales are to government contacts,” Wilkes said.
“The majority of what we’ve learnt about selling in more traditional markets like Europe and the US you can throw out the window in Asia,” he added.
The latest figures from the Australian Bureau of Statistics show that while imports of international wine have risen more than 4%, exports have fallen.
“It’s not all doom and gloom because the figures show a resurgence in the over AU$20 a bottle category, which means West Australian wines fall into a premium price point, leading to an interest in exporting those wines to the Asian market,” the WA Wine Industry Association’s Aymee Mastaglia said.
“It’s a bit of a double-edged sword. The strength of the Australian dollar means it’s a lot more difficult to break even and make a profit from exports,” she added.