Domestic wine faces a double challenge

There is a lack of high-end domestic wine brands in Chinese wine market, leaving much room for imported wine’s marketing in China. The first negative growth of domestic wine sales appeared on Nov, 2008 after years of dramatic increase, which resulted from slumping macro-economy since October, 2008. Meanwhile, after being hit by global financial crisis, international wine distributors looked for business opportunities in China’ wine market. According to the statistics of Guo Yuan Securities, imported wine has taken 22% shares in Chinese wine market and the number is likely to go up. With the decline of domestic wine consumption, wine importers take advantage of flexible price strategies to capture more market shares. Since the very beginning of the New Year, domestic wine makers were put into the awkward position.
The statistics of www.drcnet.com.cn   showed that the first negative growth of domestic wine sales appeared on Nov, 2008 after ten months’ increase. The total domestic wine production in June is 89.03 ML and has an 115.52% increase compared with November. Compared with the same period of last year, wine production on November 2008 has a sharp decrease down to -0.29%. “Since June last year, we have seen a sharp drop in domestic wine production within five months. So we predict there will be a downturn in this year.” said Teng Wenfei, analyst from Shanghai Securities.
  According to the statistics of www.drcnet.com.cn , the production drop was recorded in Hebei,Henan and Tianjin, but not in Shandong province. Shandong kept a steady increase in the total wine income and profits, but suffered a continuous drop at gross profit rate. The retail prices of wine declined compared with the same period of last year. According to the analysts, even the famous wine makers, such as Great Wall, Dynasty, Longwei and Zhangyu, couldn’t stay out of the general economic picture. They had to slow down their fast pace of development in recent years. Lin Jianguo, General manager of Ji Ma Group(Fujian province), said that the wine sales in 2008 fell by 15% to 20% compared with the same period of last year.

From china wine news