Super-low priced foreign wine made an entrance to Chinese market

    Based on the latest report from International authoritative organization IWSC, from 2000 to 2010, the consumption of wine in China will increase by 65.52%, which is 6.5 times higher than the data of international market. In order to enter Chinese market, some foreign producers offer the super –low priced wine for Chinese market.
   
    Research shows that the price of some foreign bottled wine has been lower than 20RBM; the profit is close to zero. The following example will help to clarify this situation: on 2009 National Sugar & Liquor Commodities Fair (Chengdu), the sales price of a bottled fine wine from France is even lower than 20RMB while its sales price in France is 1.1 Euro dollars. Based on the current exchange rate, the cost of this bottled wine is about 10 RMB per bottle and the cost of delivery, storage and other survey fee is about 3 RMB per bottle, which means the net profit of this bottled wine is less than 2 RMB per bottle only.
  
    This case shows a real situation of a percentage of foreign wine in Chinese market. The major reason for this is some foreign producers and local dealer want to break into Chinese wine market. However, they have no power and ability to control the sales channel. Super-low price and large sales quantity is the only way to make the profit.

    Butter effect will cause the market chaos. Firstly, sales price for most of Chinese local wine is from 30-40 RMB, which is the prices range for foreign super-low priced wine as well. There is indeed a part of the quality of foreign wine in this price range. This will affect the consumers’ choice and affect the sales of domestic wine obviously.

    Secondly, current key point is normal customer is not able to judge the quality of wine. This situation offers the possibility for some low quality even rotten wine to enter the market.

    Thirdly, some of dealers for foreign wine are being impacted. These dealers spent an enormous sum of money to build up sales channel and promote in the market. After these super-low priced wine entering the Chinese market, quite a number of enterprises are experiencing difficulties in production and management.

    Last but not least, because the general customers could not judge the quality of wine, a percentage of dealers set the final sales price as five times as its purchasing price, which made the price programs of foreign wine become unstuck.