Treasury Wine Estates’ Asia and Global Travel Retail MD Peter Dixon has moved to rival Accolade Wines.

Dixon has been with TWE since 2008 and moved into his current role in early 2017, following his predecessor Robert Foye being appointed global COO. Foye left the company last month following a breach of the company’s internal code of conduct policies.

Dixon will be replaced by Tom King, who moved to Shanghai last year to become chief operating officer of TWE’s Asian operations. King was previously managing director of TWE’s European operations.

“Peter Dixon has decided to depart the company to pursue other career opportunities and the company thanks Peter for his contribution,” a spokeswoman said in a statement. “The fundamentals of the TWE business in Asia remain unchanged, the Company has a strong leadership team in place, and remains committed to its growth plans with its partners”.

Dixon’s new employer will be The Carlyle Group, which bought Accolade Wines from CHAMP Private Equity and Constellation Brands in 2018 for about $1 billion. He will assume a leadership role within the company. 

Dixon noted on WeChat: “Many people have already heard that I will be leaving TWE shortly. I just want to personally thank all the amazing partners I’ve worked with over the past 10 years in Asia and specifically all the support from the China partners in the last five years.

“I am excited by the opportunities to be in a humble new business with amazing quality wines, which I hope everyone has the opportunity to try shortly! Also a huge thanks to my amazing team at TWE for all they have done and I wish everyone good fortune for the future.”

TWE’s China advantage

TWE CEO Michael Clarke revealed during an earnings call last week how the company’s unique wholesale model in China gives it an advantage over other wine importers.

TWE defied the Chinese economic slowdown to report Asian EBITS growth up 31% to $153.1 million in its HY19 results.

“As many of you will know, in China, we use a wholesale model where we are the distributor,” he said. “Unlike our competitors, we do not rely on a third-party distributor to sell our brands and, therefore, we do not incur the approximately 50% distributor margin.

“Instead, we partner with retailers, wholesalers and state-owned enterprises, and we actively manage those relationships directly, making decisions on how and where our brands are sold, with specific portfolio and channel strategies.”

He explained how the model offered a number of significant benefits, driving value for TWE, its customers and the consumer.

“By self-distributing we operate a more efficient value chain, which means we can deliver a lower price on-shelf and use the margin liberated from not paying a distributor margin to invest more actively behind our brands and drive consumer pull-through over time,” he said.

He also revealed that TWE’s imported value share is around double that of its sell-through value share.

“For example, in a recent period, our imported value share was around 8%,” he said. “However, our sell-through value share was closer to 4%. What this difference demonstrates is the efficiency of our model versus our competitors’. Our competitors incur distributor margins, negociants margins, additional duties that we do not incur, which ultimately result in higher retail prices for our competitors because they have more mouths to feed in their value chain.”

Clarke said the wholesale model also enabled TWE to have a deeper understanding of what’s happening in the Chinese market, including visibility on customer performance and inventory levels.

“Being closer to the customer positions us to be able to react more readily than our competitors,” he said.

Plans for expansion

Looking to the future, Clarke said TWE saw tremendous opportunity to expand its penetration into more cities and across more partners in China.

“We have an ambition to expand our presence and availability by more than 50% in the next three years, and we will achieve this through increased allocations of luxury wine in future periods,” he said.

“We are the largest wine importer into China. But even after growing our share by over 30% in the last 12 months, we still currently only have a sub-5% market share.”

TWE will also expand the quantities going through its new warehouse in Shanghai and plans to build more warehouses throughout China.

“We’re probably looking at three warehouses over time in China, North, Southeast or East and South,” Clarke revealed.

French category a “huge opportunity”

TWE sees its French labels as being key to winning share. French wine is the largest import category in China, accounting for approximately 30% to 40% of the market.

The company is preparing to launch a French Penfold’s wine, plus one through its US Beaulieu Vineyards label and and is also looking at expanding its French label, Maison de Grand Esprit.

“We are confident we can take share in this segment by putting more French wine through our competitively advantaged business model,” he said.

“The fundamentals of the Asian wine market as a whole remain enormously attractive, and we are not seeing a slowdown in demand for our brands,” he concluded.