Foster's Brewing Group announced today that it will acquire a 50% interest in a Japanese wine club, Wine Buzz KK, as part of its global multi-channel wine marketing strategy.
Wine Buzz is the new name for the wine club arm of Village Cellars KK, a specialist distributor with a growing share of Australian wine sales in Japan. Mildara Blass, Foster's wine division, will utilise Wine Buzz to increase its presence in the emerging Japanese wine market via direct and internet wine marketing.
Mildara Blass' long-standing relationship with the Mercian distribution house will continue as the comprehensive distribution channel for major trade brands, including the highly successful Greg Norman Estates Wines. Wine Buzz's activities will complement the trade business's full-market strategy by catering for consumers who are already aware of Australian wine and are looking for something different.
"Japan is strategically important to us because Australian wine is under-represented in the emerging Japanese wine market," said Terry Davis, Managing Director of Mildara Blass. "To date, no Australian wines have been particularly successful in Japan. By pursuing complementary multi-channel strategies, we expect to gain a much better understanding of the market and be better positioned to promote Australia's image as a great winemaking country."
Mildara Blass' initial investment in Wine Buzz is approximately A$550,000 for a 50% shareholding. To support business growth, initial loan funding of A$300,000 will also be provided for inventory expansion and working capital.
Wine consumption in Japan has doubled in the last four years from 1.5 to 3 litres per capita per year. While wine represents only about 4% of total alcohol consumption, Japanese wine consumption is nevertheless very substantial, being 40 times the size of Hong Kong's and 125 times Singapore's wine consumption.
Australian wine sales in Japan currently stand at 400,000 cases per year, which is 2.5% of the imported wine market and 1% of the total wine market. The main sources of imported wine are France (43%), Italy (20%), Germany (10%) and the United States (10%). Australia's image as a wine producer is very low, with Australian wines largely serving niche appeal only, mostly to expatriates and wine specialists.
Catering for this niche market, Village Cellars was established in 1987 by Richard Cohen and wife Yoshiko Nakamura, the former being an Australian expatriate who has lived in Japan for nearly 20 years. Based in northern Japan, Village has operated a small wine club business since its formation, selling all of its premium agency lines direct to the public.
The purchase agreement gives Mildara Blass the option to acquire the remaining 50% in three tranches from 2002 to 2004, with the price linked to growth in performance and return on capital employed.
"We see great potential in transferring our sophisticated marketing methodology to Wine Buzz," said Terry Davis.
"Japanese consumers are well accustomed to buying direct mail offers, but wine sales by this medium have been minimal to date. Using the networks and expertise of our clubs around the world, we will provide quality Australian, New Zealand and European wines at very attractive prices which competitors and imitators will find very difficult to match."
"We will also introduce a Wine Buzz web site, in keeping with our offshore e-commerce growth strategy."
In March, Wine Buzz will launch its first Australian premium wine offer using Cellarmaster-sourced wine and its proven marketing methodology. Appearing in Japanese-language magazines, this initial Australian wine offer will be followed in May by an offer of European wines sourced from Mildara Blass' Netherlands-based wine club, Bourse du Vin International.
Wine club sites:
Further information:
Gayle Austen
Tel: +61 3 9633 2233
Mob: 0418 457 702
Email: gayle.austen@fostersgroup.com
Rell Hannah
Tel: +613 8626 3307
Mob: 0419 369 075
Email: rell.hannah@beringerblass.com.au
