China has evolved tremendously in the last 20 years, In the 90s, the roads were jammed with bicycles, there were just a few cars. There were no films or foreign clothing, there was a lack of exposure from the outside world, an institutionalized status quo prevailed. China was in on itself, and western influence was merely making its way in. But Consumerism was flourishing, cautiously.
Slowly the early pioneers, enthusiastic men, and women from all backgrounds and industries set their eyes and ambitions in China, their goal: to bring the country to the next century. Ian Ford, CEO of Lightkeeper Studio and Nimbility Asia and co-founder of Summergate Fine Wines and Spirits was one of the original entrepreneurs in the drink industry to hit China, “The rhythm of society was simply different,” recalls Ian.
“People also thought Chinese people would never drink coffee, now the biggest Starbucks in the world is in Shanghai. As Ian explains, “Starbucks in a way is the 800-pound gorilla in the coffee business”, their new roasting shop in Shanghai was a substantial investment, a statement.”
His China journey started when he was just 18 years old. After studying Chinese at Duke University, Ian traveled to China to refine his skills. He soon found himself involved in the development of the wine importing business co-founding Summergate. Summergate is one of the leading importers in China, but it had humble beginnings. The bulk of the wine market was in foreign restaurants and hotels. Yet, it was a start, a foot in the door. In those times nobody knew if Chinese people would assimilate wine. The new company imported 200,000 cases of wine in ‘99, today numbers are closer to 60 million cases per year. Even after the austerity campaign of 2012, there has been a 15% to 20% growth every year.
Part of the success was the perceived health benefits of consuming red wine, based on the French paradox; that attributes wine for the relatively good health the French enjoy, even with their apparent unhealthy diet. It was a trigger.
Summergate quickly capitalized in the Chinese interest in French wine but also found new opportunities unimaginable at the time. Chile’s wine industry was booming with its quality oriented, varietal wines at value prices. “Nobody was asking for Chilean wine, nobody was saying it was going to be the next big thing, but we got behind it,” remembers Ian. Nevertheless, Summergate partnered with the giant Concha y Toro and hit a home run, one that continues to reap benefits for both companies twenty years later.
Seven years after starting Summergate, Ian grew its portfolio to include other products. Perrier water, like fine wine, appealed to the same type of customers and was a natural addition for the firm. “It’s one of the great brands in the world… there’s a lot of depth to it” explains Ian. Once again, cultural differences posed several challenges; Chinese people didn’t want to drink cold beverages and didn’t like bubbly drinks. “Sometimes that’s still an issue,” says Ian. The brand has positioned itself in the market successfully since then.
People also thought Chinese people would never drink coffee, now the biggest Starbucks in the world is in Shanghai. As Ian explains, “Starbucks in a way is the 800-pound gorilla in the coffee business”, their new roasting shop in Shanghai was a substantial investment, a statement. They focus on showcasing the importance of the roasting process. A few weeks after opening its doors, people still wait in line for hours to be part of the hype.
Other markets are still unexplored, spirits have a small piece of the beverage market. “There’s still a lot of room there,” says Ian; compared to the consumption of Baijiu, the national drink, spirits are under-represented. The sky is the limit, especially with a cocktail scene coming up.
The food industry has had a similar story. Artisanal food producers are having a moment. The original New York bagel recently hit the market, for example. Will people in China get into it? Only time will tell.
Today Ian focuses on his new project: Lightkeeper Studio, investing and advising in new food and beverage firms in China. After a successful career with Summergate, Ian looks back at all the advice and support he had from friends and family, he now wants to give some of it back. “It’s an exercise in working with entrepreneurs and founders and trying to deliver to them some of the guidance and support I received founding Summergate”, says Ian.
As the market develops, China is still a land of opportunity for those who dare. This is Ian’s advice for young entrepreneurs wishing to set sail in the Chinese market: Work with integrity. Integrity is how you work with people, and you earn their trust. It’s not only legal compliance, whether it’s a business partner or a consumer, always be honest. Be creative, Think laterally, work around problems. “There’ are a lot of opportunities [in China] to come up with creative ways to solve problems and get things done,” emphasizes Ian. Build a brand. Through distribution, availability, pricing. Brick by brick, putting a market together. “Patience is essential.”
Want to know more about the beverage business in China and how to succeed? Listen to the full Episode below!
Author: Franco Salzillo, Certified Somm & Wine Writer