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Ripening market for wine sales

Darren Gall, managing director of Liquid Assets, displays a bottle of red wine at the store in Phnom Penh last week.
Darren Gall, managing director of Liquid Assets, displays a bottle of red wine at the store in Phnom Penh last week.

Ripening market for wine sales

More than 20 specialty wine stores and hundreds of smaller shops selling wine have opened in Cambodia in recent years, reflecting rising wealth and an increasing local taste for wine. The Post’s Cheng Sokhorng spoke to Liquid Assets managing director Darren Gall, an Australian wine marketing expert with over two decades of experience in Asian markets, about his latest business venture and the opportunities in Cambodia’s market.

What prompted you to open the wine store Liquid Assets?
I see a continuing opportunity to develop a strong and dynamic wine market in Cambodia, because as the economy grows, people have more disposable income and consequently tend to eat better, drink better and try new things in their lifestyles.

The company is a joint venture and I am the minor shareholder. I was invited to have a role in the company as they did not have much wine expertise and they were interested to have someone with my experience and connections in the wine industry.

Cambodians are not traditionally wine drinkers. How is this changing?
Wine has always been here in Cambodia for the small group of wealthy people that could afford it. But now it is slowly growing, and in the past few years, there has been an emerging middle class that is starting to have an interest in wine. More and more people can afford wine, and its consumption in restaurants is increasing.

You’ve worked in Vietnam. What similarities and differences do you see in Cambodia’s developing wine market?
In Vietnam there is a big connection with France and strong economic growth, so wine has become popular. Tax and duty is comparable between Vietnam and Cambodia, but the interesting thing in Vietnam is that it is a communist country that relies a lot on bureaucracy and red tape, which makes it harder to bring in new wines compared to Cambodia.

I always like doing business in Cambodia because if you have good ideas, and a good business opportunity, you can work with the government to get that business going. There is minimum tax impact and minimum government interference. It is a fair system for everybody in the wine business, and consumers also find fair prices.

With so many wine shops now operating, how competitive is the Cambodian market?
It is very competitive, but the best performing outlets have good knowledge of wine and a good ability to source quality wine. Anyone can bring in cheap, poor-quality wine, but many people don’t want to drink that wine. So you have good-priced wine that is also of a good quality.

How big is your wine stock on display and in storage?
We have more than 1,000 different types of wine for display from around the world and a lot of different grape varieties and styles. The storage capacity of our store is about five containers and there are approximately 1,100 boxes of a dozen bottles per container.

What is the ratio of Cambodians versus foreigners buying wine at your store, and what buying preferences have you noted?
If we talk about per capita consumption, for expats it is higher than for Cambodians. But overall, consumption by Cambodians is higher because the population is much larger.

In the local market there are a group of wealthy people that want only the best wine in the world, which is quite expensive. Then there is the middle class, who just want to drink cheap wine, and the expats fall in between the two. Rich Cambodians can drink bottles costing hundreds of dollars, while low or middle class Cambodians prefer cheap wine from $3.

What are the main supply chain and storage challenges that you face?
The challenge of the supply chain is to maintain proper wine stocks over long periods of time. Many wine sellers don’t know how to control their stocks as they always sell the popular wines fast and sell the rest of the wine more slowly.

It is also a challenge to correctly handle wine and maintain its quality during transport and storage. Wine is easy to spoil if it is not stored properly. It should be shipped in refrigerated containers. You have to move it quickly to storage and think about the humidity and moisture in the long-term storage area.

This costs a lot of money and people in the sector don’t really understand the specifics. They just think to sell it fast and make money, so they don’t prepare to pay for the extra costs of looking after the product.

This interview has been edited for length and clarity.

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