The China syndrome – exporting wine to Asia; insider advice

It’s no secret that many Australian wine producers and intermediaries are aiming to export wine into China.

Why? Firstly, it’s massive; China, with over 1.4 billion people dwarfs Australia in its population, and its growing prosperity. It has a vibrant marketplace, eager to sample the wines of the west. Its burgeoning middle-class millennials aspire to consume what used to be luxury goods but which are now affordable. The Australian free trade agreement made with China in 2014 has certainly stimulated developments.

While China also has vast wine grape plantings, so far, its wine quality results have been underwhelming, despite investment in technology and human capital in the form of flying winemakers’ eager to transfer their expertise to the locals – despite language barriers. And China has also been busy purchasing vineyards and wineries overseas- many in Bordeaux- and within Australia.

Hector Lannible, the CEO of Stoney Goose Ridge has expertly been dealing with China (and many other countries) for years; he expands on opportunities and pitfalls; here are some highlights from his keynote TED talk, made after his recent triumphs at Vinexpo 2018 in Hong Kong.

In the beginning
“I lead a wine business, but there are substantial crossover translatable elements for any business; really, it’s all very simple. Before my stellar MBA time, archaic marketing texts described the 4 P’s – product, price, promotion and place (distribution). Slightly more evolved models included positioning. But these over-simplified theories have been superseded by much more sophisticated analytic frameworks.

Today, I describe an innovative set of 4 P’s vital to success- in China, and universally. The prime factor is relationships- I call the first aspect people. You need to step up to the plate to kick goals.

All sides negotiating need to be willing to jump hurdles to lay their cards on the table. All sides need skin in the game to carry the torch; to pin down the communication fog – the essential need for mutual respect and trust. Long-term relationships require committed, ultra-trustworthy people. So, Stoney Goose Ridge successfully concluded a nimble 700-page heads of agreement in anticipation of the memorandum of understanding. And that’s just the beginning; the final contract establishes a joint venture- the China Investment Authority (CIA).

There are no artificial “Chinese walls” or “bamboo curtains” here, we make up a team of paperless tigers –  in every negotiation in this industry it’s not just about wine, and wine, it’s about win-win.

Confronting challenges
The second key is confronting problems. Not the boring logistical issues around transport, import and export regulations, customs, trademarks. Not the meaningless gibber about language nuances and cultural differences. Not even the task of supplying eye-watering volumes of wine product. Nor the potential for political interference or the so-called triads. All these are simply resolved by the universal language – not Esperanto, not Klingon. Money.

There was no spin doctor needed to confront the elephants in the room before they reached plague proportions. Two problems that exist are hacking, and wine counterfeiting. These are more widespread than our partners initially accepted, but they bowed to our resolve. Our word is our bond and we have come in from the cold and taken 39 steps to eliminate and control threats. On the regrettable angle of substitution, our high-tech centre of excellence has incorporated cutting-edge bespoke design enhancements into packaging, and indeed into the wines themselves. Due to patent and bilateral security issues, I am unable to reveal details, but our network of agents will take decisive action to terminate breaches with a thousand cuts..

And so it goes; at the coalface, we think outside the Pandora’s box of the four winds.

Following through
The third factor is processes.

Stoney Goose Ridge leads the vanguard of support arrangements; our long-term dealings with wholesalers, distributors, retailers; our training in sales, accounting, finance, legal, IT, packaging, data-mining and brand superiority. We are infamous for our advertising, promotion and array of point-of-sale and back-office efficiencies. Plus our blockchain and cryptocurrency adventures.  Certainly, we are supremely confident that our Chinese partners are onboard and entirely speak our language. Yin and yang in feng shui harmony.

It’s a lay-down misere that the dominoes will fall, and a penalty shoot-out is not required to snooker our competitors.

We have embedded multiple cross-cultural synergies. But we won’t stop there – we have over fifty existing product lines covering varietal wines and blends at all price points, positioned to satisfy numerous lifestyle segments. Our data mining minions excel at their spreadsheet craft; the only challenge is to translate these winning brands into the uniquely inscrutable Chinese language. But I know that barcodes are universal, and our graphic design talents are truly phenomenal.

Making waves
The final aspect is personality. Although I was born a type-A workaholic rat, I was close to being a snake. Stoney Goose Ridge, under my virtuoso entrepreneurial inspirational guidance, has in the past year unleashed many market-leading new wines – Brosé, Emoh Ruo, Chamsecco®, Hipsters’ Reward, Lawyer’s Picnic, plus beers such as One Tasty Blonde, Bullant Lager, and spirits such as The Old Wood Duck (vodka) and Two Fingers (gin).  These are deservedly barnstorming chart-toppers at the box office. We bring this extraordinary creative branding acumen and flair to the CIA; and our first great leap forward into the Chinese market is known internally as project “China White”.

I remember Prince Philips’ notorious comment “if it has got four legs and it is not a chair, if it has got two wings and flies but is not an aeroplane and if it swims and it is not a submarine, they will eat it”. It reminds me of Upton Sinclair’s words about the Chicago slaughteryards “they use everything about the hog except the squeal”. I strongly disapprove of this malicious stereotyping.

Certainly, with wine, Chinese tastes, lifestyle demographics and descriptions are quite different to Western mores. The familiar Davis flavour wheel needs transubstantiation to include Chinese fruits, flowers, flavours and textures.  Our wine writers, critics and wine makers literally need galvanisation. Plus, the cuisines of China are diverse and demanding. Wine and food matching combinations require synergistic revolutionary insights. Fortunately, Stoney Goose Ridge has long employed consumer panels, and focus groups; we’re not entirely captive to our beancounters when we need to make a buck. And under my frenetic acumen, our team of wine fabricators will fully meet the needs of the market, using all the agile techniques and materials at their disposal.

We’re not fighting Voldemort; we know where to obtain sufficient silver bullets to defeat the walking dead before the full moon appears. With ice in our veins, our competitors will truly feel the heat. When you chase the dragon, you don’t want your dreams to go up in smoke. So we ensure our wines have the x factor, plus the Y and z factors.

We acknowledge the presence of many other wine brands already present in China- such as Penfolds (transliterated as Ben Fu), and the extraordinary cachet of Chateau Lafite. But we’ll leapfrog these tall poppies within years. Our competitors can try to conduct a kamikaze blitzkrieg, but Stony Goose Ridge will establish a dynasty, leaping forward with our initial 5-year plan.

And the wine industry is not interested in a dry argument. We provide the products, either as bulk or fully packaged wines; our Chinese partners deal with downstream aspects where their interlocking familial obligations ensure widespread uptake. Our partners will utilise whatever social media may exist for the Chinese markets, whether its Twitter, Facebook, Instagram or others I cannot even pronounce.

Living the dream
Just these four keys- people, problems, processes, and personality will unlock the passport to the frontier. Like Tencent, and the successful B-to-B enterprise Alibaba, I say “open Sesame”!

I often say to my flock of subordinate acolytes “when you grasp the nettle, it’s full speed ahead and damn the torpedoes”.

Finally, I can say that while Stoney Goose Ridge will be an overwhelming success in this burgeoning market, we don’t keep all our eggs in one basket to bring home the bacon.

So,  I issue a challenge to other wine companies. Stoney Goose Ridge will prevail in China, but that country’s appetite is so large there is still scope for others to operate on the fringes and niche markets that Stoney Goose Ridge has assessed as unviable. Go for it, and try to prove us wrong. There is a first time for everything!  I remain in awe of the volume, frequency, intensity and power of the bodily emanations of some of my jealous aspiring peers.

In conclusion, I reiterate some traditional Chinese wisdoms: live long and prosper, may the force be with you grasshopper, may you live in interesting times, and may you come to the attention of your superiors. Thank you.”

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