China’s Watershed Moment – Margaret River Wine

China's Margaret River Wine Shop

Brand Margaret River making inroads into a very lucrative market.

A project launching the best of WA’s wine shops among China’s high-end districts is bearing fruit. Capitalising on China’s new-found love of wine, the project is being driven by Perth-based Margaret River Wines in partnership with Watershed Premium Wines and 14 other Margaret River producers.

By the end of September 2015, Australian bottled wine exports to China increased by 47 per cent on the previous year, and while French wines still dominate the market, Australia takes a healthy 14 per cent.

But Watershed Director Geoff Barrett says he would like to see this percentage increase, with his winery becoming the largest WA exporter to China.

“There was no bigger Margaret River wine exporter to China than Watershed before this relationship. Now we are unquestionably the largest exporter in that market,” he says.

“Within the next 5 years, there will be 35 million new wine consumers in China. The big change that’s taking place in China has been driven by the millennials as an age group. The average debt of a millennial is 18.5 times that of their salary. That’s one of the things driving the Chinese economy; they’ve gone from a nation of frugal savers to a nation of frivolous spenders.”

Barrett’s role has been the facilitator of the Margaret River Wines project where wines from the region are consolidated and exported to China.

“It was I who rang each individual producer in Margaret River and spoke to them about the opportunity in China. With two exceptions, every other winery put their hand up and said they’d love to be part of it,” he says.

“The wineries participating granted distribution rights to our client but from the group of 15, there’s a smaller group currently being put together who will provide the major part of the volume going forward. Our client is going to require significant volumes, volumes that Margaret RIver has never heard of.”

Barrett says the first Margaret River wine store recently opened within a retail outlet in Beijing home to more than 50 other wine stores.

“In Beijing, they have 55 wine importers all in one building so that the wholesale trade are able to visit and get wines from every part of the world,” he says.

Open for retail as well as wholesale, the store stocks a wide range of of brands including Watershed, Cape Grace, Flametree, Wills Domain, Happs, Deep Woods Estate, Churchview Estate, Hay Shed Hill, McHenry Hohnen, Forrester Estate, Edwards, Amelia Park, Arlewood Estate, Ashbrook and Woodlands.

The store is the first of 10 expected to be launched by the end of this year, with outlets scheduled to open in select Chinese cities over the next two months.

“Within three years, we are expecting to have 300 of these wine shops in China of these wine shops in China, all branded the same way, ” Barrett says.

Incorporating branding designs from Block Design and images from Margaret River Discovery Company’s Sean Blockside, the stores will act as a promotional tool in raising awareness for the region.

“It’s a massive investment on behalf of brand Margaret River,” Barrett says.

“It is designed to take the Margaret RIver brand to the same level of recognition as Bordeaux, for example, because the number one imported wine into China is French.  But the knowledge and recognition of Australia is growing rapidly and Western Australia, particularly Margaret RIver, is very well positioned in terms of tourism. I’d say if we achieved recognition in 10 years, I’d be absolutely delighted. To get the level of recognition that we are after, I reckon we will be able to do it within 10 years. They’re going to be marketing on Chinese television and they’re sending a team down from China to do a documentary on the region – and not just the wineries, but the forests and the ocean.”

Barrett says the next three years will see 800 Chinese visit Margaret River for training at Watershed.

“This is the first time Chinese wine sales representatives have ever trained outside of the country. They will spend somewhere between five to six weeks in education and they will come back another three times over a two-year period for further education and training.”

He says he’s also looking at creating a reciprocal arrangement between the highly-prestigious Northern Wine Association in Beijing and the Margaret River brand.

In addition to the presence in China, a store will also open in Perth which will offer Chinese visitors in WA the chance to ship bottles of the Margaret River region’s wine back to China.

Article by Brooke Hunter 

Published by: Business Pulse, March 2017