A DECANTER Report.
The Sansulas of India can take solace from the fact that they are not the only ones that are tossed around and left in the lurch after working hard promoting a foreign brand which later takes a competitor in its lap, with the Bordeaux First Growth Château Lafite which has been in news for the prices shooting up in auctions and retail, changing partner in China after seven years’ successful relationship.
The seven-year relationship between Domaines Barons de Rothschild, owners of Château Lafite and their Chinese distributor Summergate has ended. With effect from January 1 next year, their competitor and the biggest importer in China, ASC would be marketing their wines.
There was a disturbing story in the Indian newspapers today. The suitor of a girl killed her simply because she did not agree to marry him! It appears something similar has happened between the two parties in China. Domaines Barons de Rothschild (DBR) wanted an equity stake in Summergate which was not prepared to sell any of its equity, according to the firm’s managing partner Ian Ford and so they decided to dump them and go to their competitor ASC.
A company statement says, « Summergate believes that the interests of its global range of quality producers, its customers throughout greater China, and all of its stakeholders will be best served by remaining independent and free of any single brand owner holding an equity interest in the company. Summergate, now in its twelfth year, will continue as an independent distributor under the leadership of its founding partners, Brendan O’Toole and Ian Ford, working with a first class team of seasoned Summergate wine professionals operating throughout the greater China market. »
« Clearly we took the decision not to sell any stake to DBR with full knowledge we were going to part ways. It was a long-considered decision« , says Ian, adding, « It was an unfortunate divergence of strategy, » he said. DBR was intent on an equity stake and control over their distribution in China, while Summergate’s ‘vision of the future’ was to remain independent.
With Lafite prices reaching unprecedented heights recently, Burgundy has started catching the eye of the importers and consumers in China with nose on the vine and Ian says they may be focusing on just that — for the moment. DBR was a fantastic brand, but there is a lot of space for a lot of big brands in China, and that Summergate was also focusing on Burgundy. Noting that the Burgundy trade body the BIVB had earmarked €400,000 for a concerted campaign in the China market, Ford said he had « plans with two companies in local regions to market and distribute Burgundy in very significant amounts in 2011. »
He also feels that Italy, especially Tuscany is also a region poised to take off in China. Of course, the company will maintain the thrust on the Bordeaux wineries which have established a mark in the affluent Chinese Buyers’ category — as also seen in the recent auctions in Hong Kong by all three leading auctioneers — Acker, Sotheby’s and Christie’s . ASC has reportedly said that DBR Lafite was coming on board — their products are being added to the portfolio with effect from January 1, 2011 according to the emails sent to the company’s customers. It has also confirmed that it would take no stake in the distributor’s company.
This is intriguing and one wonders why the relationship could have not been continued with Summergate in that case. One speculation is that the new distributor has agreed to distribute wines from the Lafite vineyard under development in Shandong with CITIC, China’s biggest state run investment company. Only the company’s sales in the medium term may or may not justify the change of distributor, as in the case of Sansula who was the Distributor for Antinori for seven years when the itch had started.