What's Mouton Cadet's Next Move After Leaving TWE?

Treasury Wine Estate (TWE) and Baron Philip Rothschild Group made an announcement on January 9: From April 9, 2020, TWE will terminate the exclusive distribution and promotion of wines of Rothschild Group in China, including Mouton Cadet and Escudo Rojo.

During this period, TWE and Rothschild Group will work together to support channel customers during the transition period.

This means that after more than two years of cooperation, TWE and Rothschild stop the partnership peacefully.

Tom King, Managing Director of North Asia from TWE said, "We are very grateful to be Baron Philip Rothschild's brand representative in the Chinese market in the past two years. We wish them continued success in the future."
At the same time, Rothschild Group expresses their appreciation to TWE for the great efforts to cooperate successfully in the Chinese market.

Several Partnership Changes

Insider told WBO: Mouton Cadet, as one of the most well-known commercial brands of the Baron Philip Rothschild family, has been looking forward to breakthroughs in the Chinese market. Previously, Torres had been the exclusive representative for more than ten years. It was because the sales did not meet the brand's expectations that they eventually stopped coorperation.

TWE's strategic goals have also been adjusted in recent years, from the Australian wine leader to the global wine leader, so French wine has also been taken into the profile. However, as a French private label owned by TWE, La Miraculeuse has filled this vacancy to a certain extent. An insider pointed out: Since the new leader of TWE North Asia came abroad, he has begun to focus on their own French brands, with a series of acquisitions in France. Marketing resources have been further placed on TWE brands. As there is a certain price overlap between Mouton Cadet and TWE's French products, the cease of cooperation could be expected.

In fact, TWE has also made a lot of positive progress after acting as the agent of Mouton Cadet. For example, in cooperation with Tmall, it created a new online and offline retail model for Mouton Cadet. The cooperation of Longcheng Liquor Co., Ltd. has enabled Mouton Cadet to land in all channels.

However, Mouton Cadet also encountered some difficulties in the promotional process.

Some wine merchants revealed that, as a commercial brand, the profit to dealers was relatively low. There are also some inventory leftovers in the market, so the price system is not stable, leading to a transparent margin.

Unlike first-tier brands, although Mouton Cadet has a certain reputation in the industry, it is still relatively unfamiliar to consumers, which also makes it difficult to sell.

For Baron Philip Rothschild family, Mouton Cadet is the family's top commercial brand, which is responsible for the Chinese market. However, TWE has no time to take care of a single brand. Therefore, it is not a bad thing for both side to stop cooperation.

What't the Next Step of Mouton Cadet?

Although it seems a smooth breakup, new problems will inevitably occur at the market level. There will be a large amount of inventory in the market from previous customers.

In fact, if Mouton Cadet has a clearer positioning, it should not be handed over to another company to represent in the future.

Large companies such as TWE, Changyu, COFCO, Pernod Ricard and etc. have too many products to put all efforts on one single brand. Even if these giants represent a non-private brands, they still want to represent something non-copyable.

Mouton Cadet is at a critical stage to develop from second-tier brands to first tier brand in the Chinese market. Consumers currently do not have much desire to actively purchase this brand. Therefore, the agent needs to devote all its resources.

In the future, the best approach is that Rothschild's family takes back the autonomy of Mouton Cadet and establish a marketing team in China, selects channel distributors by region, and formulates more detailed price and channel protection strategies in order to change the current situation.