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Chinese entrepreneur goes whole hog on Aussie wine, ambassador and all

Last Updated:2017-05-26

Former ambassador to China, Geoff Raby, served plenty of high quality wine to guests at the Australian embassy in Beijing but nothing quite like the wine that sold like hot cakes in China last year.


Mr Raby, a Financial Review columnist who still lives in Beijing, is one of the "celebrity" faces on wine produced in Australia and sold in China by the fast growing and privately owned Swan Wine Group.


The first batch of 15,000 bottles of Ambassador shiraz from the Barossa Valley sold well within days of its launch.


Mr Raby, who was Australian ambassador to China between 2007 and 2011, is one of three brand ambassadors for Swan Wine Group. The others are famous Chinese dancer Liping Yang, Australian master of wine Rob Geddes and well known Chinese TV host Olivia Xu.


Swan Wine Group last year exported 250,000 bottles of wine to China making it one of the top 10 exporters of wine to the country. Its latest success was the launch of special 1.5 litre bottles of red to celebrate the year of the Rooster.


The Chinese Australian entrepreneur behind this stunning export success story says he had two distinct advantages over fellow Australian competitors trying to crack the booming Chinese market.


Wei Li, who is founder and chief executive of the Swan Wine Group, says that growing up in China gave him a better understanding of the country's unique food and beverage culture.


"Chinese wine drinkers are different," he says.


Swan Group Wines are made to appeal to the Chinese palate. Chief winemaker, Ben Riggs, travelled to China 15 times as part of his research into Chinese tastes.


Mr Li, who became an Australian citizen in 1999, says the second advantage in building a wine business came from his decade long experience helping to build China's largest global flooring supply company, Power Dekor. It taught him the importance of controlling both product branding and distribution.

"You don't want to entrust your brand to anyone in the supply chain – it is too risky."


Swan Group branded wines are under the control of the company from the time they are made in the Barossa Valley and McLaren Vale until the point of sale in China.


The wine is distributed through a chain of stores called 1919, which is partly owned by Mr Li. Swan Wine Group wines. The wines are also sold through Walmart and Carrefour and online through giants such as JD.com.


Swan Wine Group has a total of 250 distributors in 150 Chinese cities.


The story behind the company's creation is typical of many that have come out of China. Someone with a great idea and no experience in an industry just goes ahead and does it.


"When I resigned as CEO of Power Dekor in 2008 I came back to Australia to invest in a business that had a connection between Australia and China," Mr Li said in an interview in Beijing.


"The wine industry was very competitive in Australia and that means its efficient and well run. Australian wine had a good reputation in China but I wanted to establish a new brand myself."


His timing could not have been better. The China Australia Free Trade Agreement has cut the tariff on Australian wine to 5.3 per cent compared to a 50 per cent tariff on French wine. The Australian wine tariff will fall to zero in 2019.


In the space of five years Mr Li has created a fully integrated wine export business with winemaking and bottling facilities in the Barossa Valley and McLaren Vale and part ownership of his distribution channel.


Mr Li has ambitious growth targets. He wants to make Swan Wine Group one of the top three exporters of wine to China, one of the top five selling wineries in the world and ranked among the top three wine brands in China.


Australia's total exports of wine to China surged 40 per cent to $520 million in calendar 2016. These figures included a 53 per cent growth in the premium category, which is where Swan Wine Group products are priced.