Q&A with Damien Shee of Torres China: On regional differences, retail expansion, the wine glut & more

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By Jim Boyce

Is there a wine glut in China? What distinguishes customers in the north from those elsewhere in the country? And what are the top picks from the portfolio? Those are some questions I asked Damien Shee, north China general manager for Torres, when I recently met him at the company’s retail shop — Everwines — in Beijing.

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What distinguishes north China?

Volume, because in the north people really drink. In terms of style, the preference is mainly red. Sales are not as diverse as elsewhere, with less sparkling, white and rose. Consumers also look for a lot of flavor, for full-bodied reds, so Pinot Noir is not as appreciated yet.

And different cities in the north?

To give an example, in Dalian we see a touch more white wine due to the seafood culture. Dalian, and Fujian province in south China for that matter, are two places you find more white wine. But still, it’s one bottle of white, another bottle of white, and then, boom!, four bottles of red.

What is happening with the Everwines brand?

We now have 15 standalone shops and plan to open five more by the end of the year. [Everwines shops are in Shanghai, Fuzhou, Hangzhou, Beijing, Xian, Chendu, Guangzhou, Shenzen, Nanning and Changsha.] We run about half of them and the other half are self-owned. We do audits of the stores to make sure they are running properly. There are also 24 “counter” stores, including in HOLA [home furnishing stores].

Torres distributes for what are arguably China’s two best operations: Silver Heights and Grace. What is the sales focus?

Restaurants and hotels. When you do it at that level, it builds prestige, as compared to when you sell it in a place like Metro. We also sell Silver Heights and Grace Chairman’s Reserve to our private customers. You can find Grace wines in places like the Jenny Lou’s shops, which have an association with premium brands, although we only sell our entry-level wines there.

How do people in China react to these local wines?

There is more interest in Shanghai and Beijing, more than in the south, in places such as Guangzhou that have access to a lot of imported wines due to the proximity to Hong Kong. You have a lot of expatriates who are keen to try Chinese wines. They try Grace and Silver Heights and think, ”Wow, this is good”. Chinese customers are also trying it and saying, “We never knew our wine could be this good”.

There is general consensus that China has too many importers and too much imported wine. What is your take?

There are now four to five thousand importers as everyone jumped in and thought it was a good business. You also had the immigration issue a few years back [with some people importing Australian wine in an effort to qualify for visas]. We are now paying for those sins. Plus, there is the government’s frugality campaign.

It’s a time of correction that the real distributors can ride out. Those in it for money [and without an understanding of wine] or who simply have a relative in a state-owned company that is buying their wine, but can’t now because of the campaign, are going to suffer. Distributors like us don’t have just one channel like that. We have many channels.

Isn’t there a risk that this surplus wine will get dumped on the market, that it might not have been stored properly, and that consumers will be buying cheap but faulty wine?

When they dump, the repercussion will be that general consumers will think wines are not expensive and will get used to buying wines below the real value. That is where the brands will come in. The brands add value.

What are your personal picks from the Torres portfolio: let’s say rmb100 or less, from rmb100 to rmb300, and from rmb300 to rmb1000?

At 100 or less, and avoiding the big brands, I would pick Salentin Portillo Malbec. I mean, for that much money it packs a punch and has everything a Malbec should have.

Between 100 and 300, Torres’ Celeste. This Tempranillo is one of the best values from Ribera del Duero. I’m a cheap guy and this is good value

My last pick is Jean Leon Gran Reserve Cabernet Sauvigon. You are getting bottles from 1994 and 1996 for rmb500 or rmb600. Great value for almost 20-year-old wines like those.

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