d’Arenberg has more than tripled its exports to the booming Chinese market

McLaren Vale’s d’Arenberg has more than tripled its exports to China in the past year, helping to drive a 22 per cent increase in the company’s revenue.

d’Arenberg’s Chester Osborn at the Cube. Photo - Naomi Jellicoe

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McLaren Vale’s d’Arenberg has more than tripled its exports to China in the past year, helping to drive a 22 per cent increase in the company’s revenue.

The increase in exports, coupled with an increase in direct sales from the new d’Arenberg Cube, lifted the company’s sales to $26.1 million in the year to June, up from $21.4 million in the previous year.

However, higher operating and depreciation costs resulted in a $1.1 million loss, compared with a loss of $595,000 in 2017.

Chief winemaker Chester Osborn said the company adapted its distribution model in China earlier this year, by replacing a single distributor with multiple distributors located across the country.

“We’ve been selling into China for about 20 years but we never got much impact with the old model of distribution - with our new distribution model we’ve grown by 350 per cent and that’s been driven by the premium end,” he said.

“It’s really where we wanted to go, really pushing the new distribution model, and we wanted to be in that premium part of the market.

“Direct sales are also growing quite rapidly for us because of the Cube - Australia is still very important for us.”

Mr Osborn said exports generated approximately 50 per cent of the company’s turnover, with China its biggest customer.

However, he said continuing demand from the burgeoning Chinese market was likely to result in a shortage of grapes in the coming years.

“China has been a huge boost for Australia and there’s going to be an undersupply,” he said.

“Grape prices are going to go up and that makes it tricky for wine companies that buy grapes - but we're all in the same boat and it’s time for growers to make some money.”

d’Arenberg owns more than 180 hectares of plantings in McLaren Vale and leases another 20 hectares in the region.

Together with the grapes it buys from growers, the company processes 3000 tonnes of fruit each year, producing more than 70 wines across 37 varieties.

The first batch of Montepulciano and Nero d’Avola will be bottled this year, while two new varieties are in the pipeline - an old vine Cinsault and a natural Sagrantino made by a robot within the Cube.

Mr Osborn said the $15 million complex, which opened a year ago, attracted an average of up to 500 visitors on weekdays and up to 1500 on weekends and public holidays.

Last month, the five storey cellar door, restaurant and gallery won the major international wine tourism award at the Great Wine Capitals annual meeting in Adelaide, while the Cube restaurant was named the best new restaurant in The Advertiser’s Delicious 100 list.

Despite the company’s recent successes, and the resurgence of the Australian wine industry, Mr Osborn said producers continued to face a number of challenges.

“It’s very tough out there - power prices have gone up a lot, wages haven’t stopped going up - handpicking is far more expensive than ever before,” he said.

“The WET rebate has a big impact as well - a big impact on wineries that are reasonably sized.”

Mr Osborn said the rebate, which from July this year is capped at $350,000, continued to incentivise small-scale production, leading to “inefficiencies” in the market.

“It does create lots of diversity of wineries, which maybe increases the amount of labour required in the industry,” he said.

“But it doesn’t sell one extra bottle of wine overseas. That money, if it was directed to promotion overseas by wineries or Wine Australia, I think that would be a better way to create and stimulate the industry and get supply and demand back on track.”