Gemtree Building for a Sustainable Future

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Mike Brown, chief winemaker and managing director of Gemtree Wines in McLaren Vale, says he’s more motivated than ever about cementing the long-term success of the family business – despite a highly publicised joint venture with a Chinese business partner coming to an end.

“I haven’t lost my enthusiasm for this business,” Mike says, “and Gemtree has never been better placed as a business to meet the challenges.

“Look, we all knew what we were getting ourselves into. It represented an enormous opportunity and we had to give it a go. Someone believed in us and that’s not a bad thing. I’m much prouder of our business now than I was in 2010. Our wines are better quality, we’re employing more people and we have much more control over every facet of production. Gemtree is well placed to go through to the next generation. There was once a question mark in terms of the sustainability of our business. Not now.”

Gemtree made its first wine – 500 cases – in 1998, and steadily grew production using mostly organic fruit. Three years ago Gemtree announced that Chinese property developer Song Yuangang had bought close to 50 percent of the company from the Buttery family, with plans to increase production to 150,000 cases a year to service the planned expansion of the brand – called Sacredtree Wines – across China. Mr Song committed $30 million of working capital to Gemtree over five years. It was a good news story widely reported in the media, and South Australian Premier Jay Weatherill was with Mr Song in Beijing for the announcement.

Gemtree Wines McLaren Vale

The cashed-up Gemtree Wines built a new cellar door in McLaren Vale and acquired the old Kangarilla Road facility at McLaren Flat. Gemtree went from six employees to 30 – along with 300 full-time sales reps in the main provinces of China. The business model had Gemtree selling directly to Mr Song’s distribution network in five Chinese cities and nine provinces.

Gemtree went to 150,000 cases a year as planned, but then the austerity measures in China began to bite and the market turned sour. “It just didn’t work out,” says Mike. “The outcome wasn’t what we were looking for. After that, Andrew (Buttery), and my wife Melissa and I sat down and discussed where we wanted to go with the business. We all agreed we wanted to push on with Gemtree and create a sustainable future for the next generation.”

“We’re working on a healthy strategy for the business with 70 percent domestic sales and 30 percent export. We’re producing 100,000 cases and we’re sustainable at that number. China got to 70 percent of our market, but now that’s down to five percent. It’s a much more comfortable market mix from our perspective.”

Mike thinks McLaren Vale is in a good place. “I think it’s in an amazing spot,” he says. “The opportunity the region has is it’s still learning what it’s capable of. There are a lot of exciting new producers and younger people trying new things.”

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