Virtual vintners have legs in China, toppling traditional importers

Thu Jun 23, 2016 10:28am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Adam Jourdan and Byron Kaye

SHANGHAI/HUNTER VALLEY, Australia (Reuters) - Wu Zhendong sees himself as something of a wine buff. The 25-year-old lawyer from China's western city of Chengdu is a member of his local wine club, likes to drink Chateauneuf-du-Pape - and now, like many of his peers, buys most of his wine online.

Wu reflects a major shift in China's $14.2 billion wine market, where increasingly price-savvy shoppers are driving a boom in online trade, upending the fast-growing market that has long been dominated by large-scale importers.

China's wine market, hit hard by Beijing's crackdown on ostentatious spending and corruption in 2012, is starting to show signs of revival but lavish spending by China's wealthy elite has been replaced by more prudent consumption.

"The rich and famous don't want to be seen consuming and they don't want to buy here, they want to buy in Hong Kong or elsewhere," Bruno Baudry, chief executive of China's largest traditional wine importer ASC Fine Wines, told Reuters.

Suntory Group-owned ASC is increasing its sales online and recently strengthened a tie-up with e-commerce giant Alibaba Group Holding Ltd, said Baudry. "We are not an e-commerce company... but it's an important vector of growth."

Still ASC, which grew fast as Chinese buyers boomed in the early 2000s, has taken a hit: sales were down 9 percent last year even as the imported wine market rose by around a third. Baudry hopes the firm's new strategies will help it grow sales 3 percent this year, still slower than the wider market.

"The market is recovering but it has changed tremendously," said Guillaume Deglise, chief executive of wine trade fair Vinexpo, adding thinner margins meant larger firms with big overheads were having to trim down their costs.

"The market used to be driven by the big boys. These guys are now struggling."   Continued...

A staff checks on bottles of wine at a supermarket, in Shanghai, China, June 2, 2016. REUTERS/Aly Song