Competition in Middle and Low-End Wine Market to be Fiercer

Drop in consumption capacity resulted from financial crisis is affecting production and marketing of wine, high-end wine in particular, to different extent. It is thought that drop in consumption capacity will have an impact on sales volume of high-end wine and competition in middle and low-end wine market will be fiercer in the future.

   Data shows that growth speed of wine output is getting on the right track. Total wine output from January to April was 255,300 kiloliters, registering a negative growth. Wine output in April was 63,800 kiloliters, an increase of 6.9%. Growth speed has climbed back from -9.4% to 6.9%. Despite of the growth, there is obvious impact of financial crisis on wine industry.

   To deal with consumption decrease, a lot of wine enterprises began to aim at middle and low-end market. A part of consumers will also shift to middle and low-end market which is less impacted by financial crisis, bringing about advantageous opportunity to development of middle and low-end market

Currently, domestic wine enterprises are rushing to high-end wine market.

Performance of these wine enterprises is impacted by financial crisis. In the 1st quarter in Changyu, business income was 1.25 billion yuan, a decrease of 0.58%. This was the first negative growth since 2001.Business profit was 390,000,000 yuan, increasing by 8%.

Domestic wine consumption potential will be further tapped due to the favorable wine perspective in China. Recently, some imported wine also entered middle and low-end market by lowering price. Therefore competition in middle and low-end market will get more intense, which may possibly lead to reshuffling in it.

   Imported wine has advantage in brand, so domestic wine have to compete with price reduction and promotion. Therefore living space of domestic wine is further limited and performance is affected, which may lead some small and medium-brands to withdraw from market.