AUSSINO - CHINA'S BIGGEST OPERATOR OF WINE SHOPS
The Aussino Wine Cellar in Guangzhou city.
The design of Aussino Wine Cellars are European in inspiration.
"My message to the Bordeaux First and Second Growths is: 'Don't put up your prices too much'," Robert SHUM, founder of Aussino.
Story By Ch'ng Poh Tiong
The biggest operator of free-standing wine shops in China is a company named Aussino (unrelated to another company, also named Aussino, which is a publicly listed company in Singapore famous for its bedding and home linens).
Aussino World Wines (www.aussino.net), to give the Guangzhou-based company its full name, is headed by Robert SHUM (沈宇辉), originally from Guangzhou but who went to Australia, and then back to Guangzhou where, in 1995, he registered the company which name reflects his personal odyssey. (The Chinese name for Aussino is 富隆酒业, literally, 'Rich Prosperity Wine Business').
"We started operations in 1996 as an importer of food, including meats, and wine. Two years later, in 1997, we became 100% wine focused."
Shum had cultivated his love of wine in Australia when, in 1984, he went to Sydney for studies. He visited many Australian wineries and, in his own words, evolved "from a wine lover to collector".
Aussino was conceived out of passion and an acute business sense.
"Before starting the company, we did business research and discovered that a lot of people in China had started to drink wine, but had no appreciation of it. They mixed Sprite with Lafite and Petrus. Today, maybe, it still happens inland but it the frontier and capital cities, no more," Robert Shum observes.
The enterprising founder of Aussino accurately diagnosed that China needed wine appreciation. It was as if he was starting from ground zero.
"I also realized that this type of wine business, in which you want to spread wine appreciation, is only suitable for two types of people. Either you are a wine lover or you are the son of a very rich man. The reason is because this is a long-term type of business in which you have to build brands while also spreading wine appreciation. It's different from a wine trading business which can be built up overnight," Shum opines.
Although Aussino started on a small scale, just two years later in 1998, the business began operations in Beijing. Indeed, Robert Shum moved to the Chinese capital where he lived for two years. All that time, Aussino was a wine distributor. And did not get into wine retailing until five years later.
What had prompted the move was more incidental than a long-thought out business plan. In fact, the first Aussino 'Wine Cellar' was not in Robert Shum's birth city of Guangzhou but some 470 kilometres away in Shantou where, although still in Guangdong Province, the inhabitants speak a totally different dialect called Teochew or Chiuchow.
"A good friend from Shantou had returned from Australia. He owned the building itself and, because of that, could control the cost of this new business concept. That was how the first Aussino Wine Cellar started in 2003," Shum remembers.
The Shantou Aussino Wine Cellar is a franchise. In 2006, Robert Shum started the second wine cellar in his home city which is entirely owned by the company.
"The standard was of a higher level for the Guangzhou wine cellar. We pegged it to an international level because we hope to take the concept to the other big cities in the country."
When I asked if that includes Macau, Shum's reply reveals the cautious yet enterprising businessman that he is.
"I don't understand the market in Macau. Maybe my son will do that one day (Shum's son is 5 years old). China is already such a huge market. Since we started in 1996 to 2008, we have grown 50 times."
BUSINESS ACTIVITES
Aussino is a wine distributor, importer and wine retailer.
"The are two arms of the business. The first is to sell to hotels, restaurants, department stores, clubs, cafes and Chinese restaurants. The second arm is building up our retail outlets," Shum explains.
When Aussino started operations back in 1995, importing and distributing wine represented 80% of the business with the balance 20% devoted to wine retailing. Today, the two arms are about equal in importance to the company.
Regardless of whether it is wine distribution or retailing, the 'back-up' of publications and materials available to the customer or consumer provided by Aussino is impressive.
"Our company is very respectful of education. We publish our own wine guides which are also sold in other wine shops. We also publish a quarterly magazine called Aussino Wine Life. And there is also a bi-lingual Chinese/English website."
As far as its retail operations are concerned, the Guangzhou and Beijing outlets are all 100% owned by the company. As for the outlets in Shanghai, Chengdu, Chonqing and Wuhan, those are joint-ventures. In all other cities, the outlets are owned by franchisees.
Whether joint-ventures or franchisees, the retail outlets have to attain a standard of design and finish to the satisfaction of Aussino. At the same time, they are also obliged to only carry stocks purchased from the company's list and inventory.
The success of Aussino is such that, today, it is regarded as one of most important wine players in the most populous country in the world.
Read More... Q & A WITH ROBERT SHUM
CH'NG Poh Tiong: From the time Aussino started in 1996 till today, how has wine appreciation evolved in China?
Robert SHUM: The biggest change has been that today, Chinese consumers no longer add Sprite and Coca Cola to wine. Around 1999 and 2000, when people realized that it was wrong to add those soft drinks to wine, they switched to drinking local wine. After all, since they no longer added Sprite and Coca Cola to wine, in their mind, there was no difference whether they drank local Chinese or imported wine.
Then, in 2001, after starting to drink foreign wine, Chinese consumers discovered that the taste was really different from Chinese wine. And that it was a good difference. |
Robert SHUM,
Founder of Aussino.
|
A few years later, from 2004 onwards, Chinese consumers discovered that there were also differences in different imported wines. From 2004 to 2007, with the boom in stock and property prices, people started buying expensive wines and Bordeaux owes its success to this period.
CPT: Why is Chateau Lafite so very famous in China?
RS: This is a good question. The answer is that to Asians, particularly Chinese, a brand is very important. It is not just the quality but face. So, for example, if an LV (Louis Vuitton) bag costs RMB 10,000 and a Gucci is only RMB 7,000, even though Gucci's quality is as good, people want to own an LV because the brand is strong. Lafite was the first First Growth to enter the Chinese market. It was brought here by Remy Fine Wine of Hong Kong more than 20 years ago. The second reason is that of the five First Growths, Lafite is the most silky, round and most suitable for the Chinese palate. Because of those two reasons, Chinese leaders, senior government leaders and big business leaders, when one needs to ask for help and when presents are given, Lafite is the choice because everyone knows the value. If I were to entertain 10 people and serve Lafite, all 10 will know it. With Latour, only five or six out of 10 and only 3 for Margaux. However, since 2007 those other chateaux are catching up.
CPT: Do you think Bordeaux futures or primeurs will catch on in China?
RS: Primeurs won't be very big because of culture. There is a Chinese saying that goes: "Don't buy a cow from the other side of the mountain" (隔山买牛) because you can't see it. When you want to buy something, buy what is in front of you because you can touch and inspect it. It's a question of 'language'. When you buy futures, you only get a certificate. What if they close down? Where would you go? I don't think primeurs will be big in the next 8 to 10 years. It's different in Hong Kong and Singapore because the English language is not a problem there.
CPT: Do you see any big change in buying habits taking place now?
RS: Another change is taking place. From 2008, there will be a good change because people will not choose the Grand Crus blindly. Consumers will look for mid-price. Why? Firstly, the First and Second Growths have become too expensive. Secondly, the Chinese economy will not be as strong as previously because of events such as the earthquake in Sichuan this year, floods, exports becoming more expensive because of the stronger RMB, new labour laws, and the stockmarket having gone down to 2000 points (this interview took place on 2 September 2008) from a high of 6000 points. My message to the Bordeaux First and Second Growths is: 'Don't put up your prices too much'.
CPT: What is the future for champagne in China?
RS: There is a future but it will not be as strong as in Japan, Hong Kong or Singapore. Chinese people still prefer red wine.
CPT: What is the typical Chinese wine drinking habit like?
RS: People drink on occasions rather than as an everyday drink. They drink to entertain business, to celebrate business and on occasions such as the mid-autumn festival and the Spring Festival. But when they drink, they drink a lot. |
Read More... AUSSINO'S FOUR RETAIL CONCEPTS
5-Star
This is the 'Wine Cellar' where customers can buy wine at retail and also drink the bottle/s at the lavishly decorated 5-star 'Wine Cellar' by adding another RMB50 for the privilege.
4-Star
These are retail Aussino 'Wine Shops'. They are also independent in the sense that the shops are not located in a department store.
3-Star
These are 'Wine Corners' located within a supermarket
Wine & Dine
Aussino has just opened its first 'Wine & Dine' concept in Guangzhou (across from the Grand Hyatt Hotel). Joined to a 'Wine Cellar', Aussino Wine & Dine boasts an oyster bar, teppanyaki private room, and a dining room that serves Chinese/Western fusion food.
