Bulk wine shadow of the Chinese renown wine producers

There are always doubts cast on some renown wine producers' production with imported bulk wine. But none of them has confirmed. 

In the face of fast-growing import of wine, China's major wine producers Greatwall Wine and Dynasty Winery Ltd. have reformed the distribution channels. Tianjin-based Dynasty Winery post a 1% increase in the first-half turnover due to the rise of average ex-factory prices. The company this year streamlined former multi-layer marketing and distribution channels to strengthen direct control over existing channels. This caused a decline in its wine sales in Zhejiang province, which directly dragged the first-half sales growth. 

Greatwall Wine's parent company COFCO Wines & Spirits Company Limited in the first half of 2010 adjust the product structure and distribution channels, which directly forced declines in some distributors' sales. The company's sales revenue thus slid 7.3% during the period and profit fell over 40% to CNY 179 million. The sales volume in the first six months of 2011 still fell 9.1%, which forced a 1.7% drop in the market share of Greatwall Wine. But the sales revenue gained 20.4% year on year to HKD 1.753 billion due to the strong growth in sales of to-end wines. 

The two major wine producers' are shifting to medium and top-end wines that have higher gross margins from low-end ones. 

Currently Greatwall Wine's sales revenues from top-end and medium - and top-end wines account for about 50% of total, according to its semi-annual report. 

ChangYu Pioneer Wine Company Limited post a 24.5% increase in the first-half revenue CNY 3.09 billion, far beating the total amount of Greatwall Wine and Dynasty Winery. The Yangtai-based wine producer is more competitive in brand operation, distribution channels and product structure. Its ChangYu Castle, Ice Wine and ChengYu AFIP wine are priced between CNY 300 and CNY 1,000, a range seldom impacted by imported wines. The continuous expenses on advertisement, flat distribution network and incentive mechanism make ChangYu Pioneer Wine surpass rivals at home.