Having just settled into the role in June, Nagae works closely with Mario Aron, COO of the company, a veteran in the wine business, too. Nagae says he would continue to achieve the company’s vision as “a lighthouse for wine consumers and trade”.
“In order for us to realize our vision, we’d like to be a ‘Winning Team’ which has consumer-centric mind to grow the business sustainably in Greater China wine market”, he states. This would include consolidating and growing the company’s B2B business, strategic partner brands, enhancing its premium and artisan portfolio while exploring new category and channel, according to the CEO.
Following a pandemic-hit year, ASC registered notable growth in the first half of the year, growing at 30-40% compared with the same period last year, Nagae revealed in the interview.
“We planned a strong sales recovery from pandemic for 2021 and successfully hit our target in the first half of this year, thanks to each one of ASC team members’ effort,” he said, but cautioning that a fast recovery of the market is unrealistic.
“We assume it will take a year or two for the overall wine market to achieve full recovery to the pre-Covid period. The speed of recovery also varies in the different sales channels,” he admits.
The priorities for the second half of the year, which is lined with key Chinese and western holidays, will be restoring momentum after the downturn driven by Covid-19, the CEO stresses. “Our priorities would be, first to enhance employee’s engagement, to rebuild sales organization with reinforcing B2C, and to refresh portfolio and to expand consumer touch points. Lastly to evolve SCM capability,” he details.
The company is planning to add eight new brands at the moment, mainly from premium category this year. “The purpose is to restore confidence and encourage our customers especially on-trade to add sales,” he explains.
The latest surge of Delta variant in China after the country has successfully contained Covid-19 for over a year will add uncertainty to recovery, but “impacts so far are mild but if the situation develops further it will affect on trade business,” he warns, “We need to closely monitor the development of the situation.”
Calling the pandemic “a great challenge” to the wine market in China, there are however lessons to be learned, and new business opportunities.
The CEO said that the pandemic has led the ASC team to focus on positivity and explore new opportunities in trying times. “There are a lot of opportunities around us. For example, it is the right time to accelerate developing independent restaurants which are growing their business significantly despite of Covid-19, or we have huge room to grow our fruity wine category with enhancing online sales platform and so on,” he expands.
Admittedly, on-trade sector has been “severely affected by the pandemic”, he says, independent restaurants as he underscored have reported encouraging growth in the second half of last year, according to the CEO.
Wine sales in leisure and holiday hotels are looking up this year but for business hotels, it won’t fully recover until international travels resume, he estimated.
Additionally, its e-commerce business, which the company had set up in 2008 among the earliest in the wine trade, has continued to grow. The sector contributes to around 20% of ASC’s overall revenue and has been growing steadily every year.
In addition to traditional e-commerce platforms such as Taobao and JD.com, the company is also leveraging social media channels such as Wechat, Weibo, Tiktok to drive online sales.
“Our online business has evolved with the market. Around 2008, we made our first ‘vertical online wine sales platform’. Around 2010 we started ASC’s social media on Weibo, on short-video campaigns on Weibo, then WeChat mini-program, livestreaming shows. This year we will extend our social media and online efforts to Tiktok – talkshow, and sitcoms.” says Nagae.
When China formally announced 218% anti-dumping tariffs on Australian wines, the impacts were immediate. Australian wine exports to the country plunged over 95%, and its market share in China was shaved from nearly 40% to less than 9% by May this year.
At ASC, the company imports five Australian wine brands, which are Brown Brothers, Henschke, Leeuwin Estate, Pewsey Vale Vineyard and Yalumba. In total, the company imports about 1200 different wines from 15 countries.
Despite the tariffs, the CEO’s confidence on Australian category seems unabated. “Our partnership with our producers are long term based. Although the supply of Australian wine is facing the setback, it will not decrease our commitment to our Australian partners for their long term development in the market.” he affirms.
Asked if any wine regions or countries have emerged to replace Australian wines, he remains cautious to single out any winners. “It is hard to predict what wines to replace Australian wines. Origin of place is just one facet. There are many other factors in the spectrum e.g. price points, taste profile, brand awareness. We have wines from 15 countries in our portfolio. We are confident to meet any kind of customers’ needs,” he says.