Woolworths has bought itself a foothold in China’s growing wine and drinks market, acquiring one of the country’s largest alcoholic drinks distributors.
The retail giant has acquired Summergate Fine Wine and Spirits, which distributes imported alcoholic beverages across China and also owns a retail business called Pudao Wines.
Woolworths is one of Australia’s largest drinks businesses and owns the Dan Murphy’s, BWS and Cellarmasters brands.
The liquor division has been one of the retailer’s best performing businesses in recent years amid tough competition in its core supermarkets business from Coles and Aldi, and the money-losing roll-out of its Masters home improvement brand.
Woolworths has not revealed the cost of the acquisition but says it expects strong growth from Summergate, which was founded in 1999 by current general managers Ian Ford and Brendan O’Toole.
The head of the retailer’s liquor business, Brad Banducci said Mr Ford and Mr O’Toole would continue to lead the company.
“They have extensive knowledge and experience in the region’s drinks market and we are thrilled to make this investment to help support and grow Summergate even further,” Mr Banducci said in a statement on Wednesday.
Woolworths shares dropped as low as $29.96 on Tuesday, their lowest level in nearly two years, before recovering slightly to finish the day at $30.24. The moves came amid growing concerns about the company’s ability to fend off supermarket competition and disappointment with the Masters business.