Establishing cellar doors in China to provide a winery experience directly to consumers is proving a successful formula for a South Australian wine company.
Tomich Wines is preparing to open its third cellar door in China and is in discussions with potential local businesses about opening two more.
The Adelaide Hills winery began selling wine in China in 2007 but has increased its sales five-fold since it opened its Shanghai cellar door in 2012. It now sells about 25,000 cases a year in the world’s biggest economy, accounting for about a third of the company’s total production.
Since then a second cellar door has opened in Chengdu and a third one is opening soon in Chongqing, a city near Chengdu.
Owner Randal Tomich said the cellar door concept gave his winery long-term consistency in China and involved forming ties and with local businesses.
“A-grade distributors set up their own cellar door and they get preferential pricing and have the licence to sell the Tomich branded product exclusively in that province,” he said.
“It’s a win-win. I get the secure customer, I get my brand integrity and they get excellent quality wines at prices they wouldn’t be able to achieve elsewhere.
“By moving to the cellar door model there they are actually committed to the product.”
Opportunities for more venues
Tomich said he was negotiating with a business in Beijing and was also in talks with parties in Jinan during a trade delegation of South Australian business and government leaders about opening cellar doors in their cities.
“There’s a lot of opportunities for more venues, it’s just a matter of finding like-minded people who really buy into the brand. The wine’s good and the styles are right for China.”
“China’s all about meeting people, building partnerships, building trust and all those basic elements that are that are the same all over the world.
“My dream is to have a cellar door in the main street of St Helena and Napa.”
Research released last year by the University of South Australia’s Ehrenberg-Bass Institute found that a visit to a winery's cellar door made consumers more likely to buy the winery’s product for months after the visit.
Lead researcher Professor Johan Bruwer said that the research shows a cellar door visit has a much wider impact beyond simply counter sales on the day.
“The cellar door can give the brand a good story if those who visit and taste the wine have had a good, authentic, and memorable experience. People who visit a cellar door also become more educated about the wine region and this increases the consumption of wines of that origin,” Prof Bruwer said.
Tomich established the winery’s Adelaide Hills vineyard in the 1990s with his father John and grew grapes for Penfolds before focusing on making their own wines from 2008.
South Australia is consistently responsible for almost 50 per cent of Australia’s annual production.
There are 18 wine regions in South Australia, including the Barossa Valley, Clare Valley, Coonawarra, Adelaide Hills, Langhorne Creek, McLaren Vale, Limestone Coast and Riverland.
More than 200 cellar doors are within an hour’s drive of the capital city Adelaide.
Based on the US model
However, in 2011, Tomich Wines established its cellar door in the heart of Adelaide, more in line with the US model, which it has also successfully taken to China.
“I saw the city cellar door concept in California and it is really successful there and I like to have my team based in the city. So we rolled out the cellar door based on the US model and we offer structured tastings here.”
The Shanghai cellar door is a near replica of the Adelaide tasting rooms and is a result of a long-term commitment between Tomich and Chinese businessman Ivan Shiu.
Mr Shiu said Tomich had invested a lot of time learning about Chinese business practices, which had helped him develop connections.
“The most important thing about the business partnership is that we have the same goal and we can do the branding and the distribution step by step,” he said.
“It’s very important for the Chinese to have a cellar door experience because they can come and taste the wines one by one.”
In 2015, Tomich also signed a distribution agreement with China’s biggest hypermarket chain, RT-Mart.
“We’ve got about half a dozen products in there now under the Famous Australian Brands,” said Mr Tomich.
“The majority of the market in China is in more entry level products whereas I am a premium wine producer so I usually have a mixed container policy where we do the majority entry level stuff but they take some of our higher-end product and we do about two containers a month now.
“The Chinese palate is maturing at a very fast rate and they now have an appreciation of fine wines, which they never had before.”
Andrew Spence is a senior writer for The Lead, South Australia