Domestic producers use social platforms to attract consumers

Domestic sales of Chinese wine brands have been dampened by the novel coronavirus epidemic and restrictions on social gatherings this year, industry players observed.

In China, the consumption ratio of wine at social versus family gatherings is about nine to one. But drinking wine at social gatherings has been largely limited due to the epidemic, thus severely dampening wine sales.

In the first two months, domestic wine brands achieved sales revenue in China of 1.29 billion yuan ($182 million), down 40.8 percent year-on-year. During the period, net profit reached 50 million yuan, plunging 58 percent year-on-year, according to the China Alcoholic Drinks Association.

China's biggest wine producer, Changyu Wine Group Co Ltd, said sales from hotels suffered the biggest declines. Supermarkets and liquor stores have also experienced wine sale declines.

In March, when the novel coronavirus infections started to recede in China, the market began to improve. Changyu said its sales performance in April was better than March, because sales on several channels had picked up and its e-commerce platform business had grown quickly.

"The habit of drinking wine at home has not been formed in China, and it will not change much due to the epidemic. Thus wine consumption this year will suffer and it will be a slow recovery process," said Sun Jian, general manager of Changyu.

"We encourage our dealers and partners to transform their business models, launch stores on multiple online platforms and promote sales through posting short videos and holding livestreaming sessions. Dealers should fully take advantage of social platforms such as Meituan, Ele.me and Douyin to promote sales," Sun said.

He added that the next peak season for wine sales is expected to occur around the Mid-Autumn Festival in October. The epidemic is getting under better control in China, but sales are unlikely to be better than in past few years.

Yantai, Shandong province-based Changyu said digitalization will be the future trend to support growth, and it plans to cooperate with major digital companies such as Tmall, JD, Suning, Huawei Technologies and Byte-Dance to strengthen its online operations and better utilize consumer data.

The association said the novel coronavirus epidemic may bring about more opportunities for domestic wine brands.

For Chinese-produced wine, there aren't any communication barriers and cultural differences for vintners when promoting their products at home.

With COVID-19 continuing to spread overseas and limitations still in place on foreign travel, domestic wineries should grab the opportunity to promote winery and vineyard tours. This can help improve consumer awareness and drive industry growth, the association added.

In the first quarter, the Ningxia Hui autonomous region, a major wine producing area in China, built up an additional 2,120 hectares of vineyards, and the local government has approved the construction of six new wineries.

"The epidemic has delayed wine drinking. Consumers are expected to pay more attention to healthy and high-quality products, and we should remain confident and prepare well for the growth opportunity," said Chen Lizhong, owner of Tiansai Vineyards, a chateau in the Xinjiang Uygur autonomous region.