China’s tech giant Tencent is uncorking opportunities in the country’s vast and less contested drinks delivery market by investing in a Guangxi-based new drinks delivery service platform called Jiu Xiao’er.
The new round of investment from Tencent means that the tech company has now contributed to over 12% of the startup’s first round of significant funding since its creation in 2014.
This gives Jiu Xiao’er the resources to expand its delivery network from South China to the whole country amid a pandemic-induced shift towards online shopping and delivery services.
Despite heavily competitive food delivery market dominated by major players such as Alibaba-owned Ele.ma and Tencent-backed Meituan in mainland China, delivery services specialized in alcoholic drinks from beer to wine are relatively nascent.
Jiu Xiao’er, which means ‘alcohol server’, was thus created by Li Yongxin to capture this untapped opportunity.
According to its website, it says it works directly with wineries and importers to cut prices for end consumers, and has over 1000 SKUs in its portfolio covering beer, wine, baijiu, and spirits.
Some of the better known wine names such as Australia’s Penfolds, Yellow Tail, Rawson’s Retreat and Chile’s Montes and Casillero del Diablo are among common names seen on its app.
It boasts same-city delivery of less than 25 minutes in more than 30 cities mainly located in southwestern and southern parts of China.
It operates on several different ecosystems including its own app, Tencent-owned WeChat, WeChat mini program and third-party delivery platforms such as Ele.ma, Meituan and JD Daojia.
As of this year, the platform says it has 3.8 million users and close to one million monthly active users. It expects its gross merchandise value to exceed RMB 5 billion (US$ 762 million) within two years.
It’s not just Tencent that’s eyeing the potentially lucrative alcohol market. Its arch-enemy Alibaba previously also pumped RMB 2 billion (US$288.3 million) into 1919, the Sichuan-based wine and spirits retailer.
The retailer also launched a similar delivery services as part of its customer services to edge itself ahead, but a company solely dedicated to alcohol delivery is rare.
In China, corkage is technically illegal, meaning that it’s allowed for diners to bring alcoholic beverages with them, without paying corkage or hefty mocked-up prices at restaurants.
Therefore, the platform capitalizes on the opportunity to supply booze to banquets, family dinners and business meals, as well as home delivery.