Woolworths steps into China

Date : 08 December 2014

Woolworths Liquor Group has acquired Summergate Fine Wines and Spirits, a leading Chinese-based wine and drinks distributor.

Woolworths Liquor Group has acquired Summergate Fine Wines and Spirits, a leading Chinese-based wine and drinks distributor.

Boost for the Australian wine industry

Summergate represents and distributes approximately 80 global brands in China. It has 13 offices and 11 distribution centres and was established in Shanghai in 1999. The business also operates a small fine wine business called Pudao, which has two stores, as well as a small online and direct retail operation. Woolworths plans to work with the Summergate business to grow the reputation of Australian wine in the world's largest grocery market, plus also introduce its Langton's online wine business into the market.

Capitalising on the new China-Australia free trade agreement

This appears a smart move by Woolworths following the landmark China-Australia Free Trade Agreement that was announced in November this year. Under the agreement current tariffs on Australian wine of 14-30% will go within four years, enabling the retailer to overcome a significant barrier that may have restricted market entry previously. Woolworths will also look to transfer its market leading industry expertise from Australia to the Chinese market, whilst at the same time see what leanings from the Summergate team can be applied into its Australian operations.

First move into China

Woolworths CEO, Grant O'Brien, commented: 'This is a very small step into China, capitalising on our Liquor expertise. We have a conservative investment lens, particularly in relation to international acquisition opportunities. Summergate is predominantly a distribution business and fits well with our supply chain and Liquor capabilities.'