• Friday, October 09, 2015

E-commerce threatens traditional traders in China's wine market

Staff Reporter 2014-06-29 17:32 (GMT+8)
Wines on display at the China Food & Drinks Fair in Chengdu, March 30. (File photo/Xinhua)

Wines on display at the China Food & Drinks Fair in Chengdu, March 30. (File photo/Xinhua)

The market for imported wine in China has reached 100 billion yuan (US$16 billion) a year but there are still no leading brokers or end retailers emerging, with many blaming the low prices offered by e-commerce firms too low, Shanghai's CBNweekly magazine reports.

Prior to 2010, business for many wine trading companies and dealers came mostly from corporate and government procurement, obtaining clients through relationship networks. They were able to set higher prices by capitalizing on a relative lack of local knowledge about wine.

Smaller wine agents typically find it difficult to gain access to supermarkets or convenience stores as distribution chains. While supermarkets or convenience stories usually charge shelf costs of at least 300 yuan (US$48) each year per store per item and these chains usually expand by dozens or even more than 100 outlets a year, the shelf costs to stock one item could easily reach 100,000 yuan (US$16,000) a year.

In recent years, the popularity of e-commerce firms have shrunk the profits of wine companies. Most wine trading companies encountered a decline in sales last year, with some big traders seeing revenue fall by more than 30%.

Wine imports are seen to have good prospects overall over the next five years, however. About 10 years ago, 90% of China's wine market was dominated by three domestic producers — China Great Wall Wine, Changyu and Dynasty, but now imported wine accounts for nearly 30% of the total.

In 2012, China surpassed France and the United States to become the world's largest consumer of red wine, although the white wine market still trails far behind the US. In 2013, China, including Hong Kong, consumed 1.865 billion bottles of red wine, up 136% from 2008, according to statistics from Vinexpo, the world's leading wine exhibition company, which projected China's wine market will grow 33.8% further by 2017, of which imported wine will account for half of the total.

The growth chiefly reflects the rise of the country's middle class and the market no longer depends on procurement or gift sending. In the past, the retail sector accounted for just 30% of the total wine market, but this situation will gradually change as the emerging middle class will focus on enjoying their expanding wealth and leisure time, experts said.

Who`s who »
Qin Yizhi (秦宜智)

Qin Yizhi has been the first secretary of the Secretariat of Communist Youth League of China Central Committee since March 2013 A native of Xinxiang in Henan province, he was born in 1965 and ...