Woolworths Group, the Australian retail giant, is mulling closing down Summergate Fine Wines & Spirits’ business operations in Hong Kong, Macau and mainland China after a deal with private equity firm Gravity Capital fell through.
In an email sent out to Summergate customers, Chris Cramond, Director of Summergate Group and Woolworths Group Business Development, announced the decision: “Unfortunately, despite further discussions between both parties, the proposed sale is no longer proceeding in accordance with the original arrangement.”
As we have exclusively reported on the deal earlier this year, Woolworths entered into discussions with Gravity Capital to sell Summergate Fine Wines & Spirits and its retail business Pudao for an undisclosed amount.
The deal was expected to be finalised in March this year, but a long silence from both parties on the closing of the deal fuelled specualation something went awry.
The undated internal email confirmed the fallout. The company is now reviewing its options and is not ruling out shutting down Summergate altogher.
“As a result, Woolworths Group is reviewing its options regarding the future of the Summergate Group, which may include an orderly closure of its business operations across China Mainland, Hong Kong and Macau,” wrote Cramond.
The reviewing process as Cramond said would take a few weeks before a final decision is reached.
Vino Joy News has reached out to Summergate for comments but at the time of publishing no replies have been received.
The news has not been publicly announced by Summergate yet, but sources have told Vino Joy News that employees are aware of impending mass layoffs and an official announcement is expected within the month.
Summergate was first founded in 1999 and became one of China’s leading wine and spirits importers. In 2014, it was sold to Woolworths for reportedly US$25 million. According to its website, it exclusively represent 60+ brands to clients across Hong Kong, Macau and mainland China and operates 9 regional offices across China.
However, Summergate has gone through a string of challenges after its sale including streamlining its distribution channels and laying off staff in Greater China region. It had a few leadership shakeups including three CEO changes in just 5 years after it was purchased by Woolworths in 2014.
The pandemic that has forced many business to close also dealt a heavy blow to many of China’s wine importers including Summergate.
The closure of Summergate if finalised would also mean hundreds of job loss and a tragedic end to a once leading wine giant in China.