By David Sly
Exporting Australian wine is a meandering, often maddening route, especially for small brands that make up the bulk of this nation’s 2400 wine producers.
Boutique Adelaide Hills brand Tomich Wines has forged its own unconventional path to global customers by exploring and entering different types of trade partnerships, to ensure enduring export sales.
“As a reasonably new wine brand, we need to find new opportunities to enter the market, which means we have to look at things quite differently,” says Tomich Wines director and winemaker Randal Tomich.
The Tomich family established big vineyards in Adelaide Hills from 2000, comprising 27 blocks across 130ha, and initially sold all the grapes to Penfolds.
By 2003, small volumes of fruit were being retained to start the Tomich wine label, and by 2009, when the contracts with Penfolds ended, their emphasis changed.
“We got serious about selling wine,” explains Randal, noting the steady rise of Tomich Wines to now produce about 60,000 dozen wines annually.
This change saw export strategies become an important part of the business plan, but as a new wine label, Randal felt he needed to explore different opportunities rather than follow the same crowded trade routes to US and UK customers that were already filled with scores of Australian wine brands. Instead, from 2009, Randal looked to Hong Kong and China.
“I see these as great areas of opportunity, places where we can establish our own clear identity,” he says.
Selling strong and consistent amounts of wine into China has not been an easy progression, but Randal has persevered, while shifting strategies and learning to embrace different cultural and business practices.
Randal’s current Chinese business partners have suggested to him that Australian wineries need to be more creative about how to market their wines in China; for example, obtaining an endorsement from an esteemed entrepreneur such as Jack Ma of Alibaba fame or a Chinese media celebrity would be much more influential than promoting high scores from respected Australian wine critics.
While Tomich Wines has not pursued the endorsement path, it has opened its own elegant cellar door tasting rooms and sales outlets in Shanghai, Chengdu and Chongqing (located in the foyer of a five-star hotel) and employing professional Chinese wine staff to represent the company, where other Australian exporters have employed language students for similar sales roles, with mixed success.
Establishing a strong physical presence in major Chinese cities has been crucial for Tomich Wines to establish necessary sales networks. It now has 17 distributors working in different parts of China, in a complex and surprisingly fragmented system.
“You can’t think of China as one country, because there are many, many small networks built around individuals rather than a highly complex and evolved distribution system,” says Randal.
Still, having established a string of functioning networks throughout China, Randal is also considering other strategies, including starting new wine businesses with Chinese partners, in which he would be prepared to take a minority shareholding.
“It would show that I’m not trying to take advantage of any Chinese partners, and ensure that I would not be a barrier to growth. It’s not the way business partnerships work in Australia, but China demands a significantly different approach and mindset if you are going to make headway.
“I’m an entrepreneur and I can see great opportunity there,” he adds. “I believe the future of wine is in China, and that the time to invest in China is now.”
China is only a part of Tomich’s export strategy. The company’s presence in the US is also unconventional, built on the back of Randal’s successful vineyard excavation business Soilworks, which uses advanced soil ripping techniques that help prevent soil erosion, maximise water retention efficiency and accelerate successful establishment of new vines.
Soilworks started winning vineyard-ripping contracts in 2008, and by 2011 the Tomich family had become partner in a 70ha vineyard in Pasa Robels, California.
The resulting T&C wine range comprises small volumes of elite cabernets and zinfandel which carry prestige in US retail outlets, and has provided an opportunity for Tomich Wines to piggy-back into the same markets – which Randal says are notoriously difficult for high-value Australian brands to break into.
“Everything gets categorised in the US, and Australian wine is categorised as sitting with (lowest-priced) Yellowtail wines,” he says. “It’s a perception that can’t be shaken, so for our higher-end wines, we had to find a different way in.”
While exports currently account for up to 40% of Tomich Wines’ production, Randal says he wants to realign the business focus to increase sales in the Australian market.
“Export is a key but we still get the highest value from our sales in Australia,” he says, although he remains committed to pursuing unconventional pathways, outside traditional distribution networks.
“Forget the old models,” Randal suggests to emerging wine entrepreneurs. “There are new and different opportunities, but you have to go and hunt for them.”
Header image features Randal Thomich, left, and Patrick Zhu.
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