Wajiu China, arguably the fastest-rising and most ambitious wine importer in the country, emphasized that the future of the nation’s wine sales no longer lies in what the company calls the “highly contested” traditional on-premise channels, according to its general manager.
Speaking at a South Australian forum organized by local Chinese media and the South Australian government in Chengdu, Jin Song, General Manager of Wajiu China and a board member of Wajiu Group — the Beijing-based wine importing company that has bought and merged two of China’s biggest importers, Summergate and Torres China — downplayed the significance of on-premise channels in driving wine sales in the country.
The channel though according to some reports is still reponsible for the bulk of the country’s wine sales, at least prior to the pandemic, has now become too crowded, thus leaving fewer opportunities for wine brands, said Jin.
“In 2023, restaurant sales broke through the RMB 5 trillion mark, witnessing a robust 20% surge in consumer spending. Among these, 6,835 high-end dining establishments have incorporated wine into their offerings. Yet, with only slightly over 400 Black Pearl and Michelin-starred restaurants, it’s clear that the competition in the on premise wine market is fierce.,” he explains. Black Pearl Restaurant Guide, a renowned dining guide introduced by China’s delivery behemoth Meituan, features approximately 300 diamond-rated restaurants nationwide, whereas Michelin has awarded about 120 stars within mainland China.
On how to manage channels beyond on-premise, Jin Song believes this requires a strong team. For example, choosing products that can generate high volume and having its own team to manage operations with large supermarkets would pose a huge challenge for small or medium sized wine companies.
E-commerce and specialized regional players will grow to play bigger roles in influencing wine consumers in China, according to the merchant.
“We are optimistic about e-commerce,” Jin stated, “as it continues to rapidly develop, becoming the primary channel through which young people purchase wine, and significantly eating into the traditional distributor’s market share.” He believes that while the distribution channel is shrinking, local distributors with the resources to offer localized services still have opportunities, turning them into service providers for brands.
“We are optimistic about e-commerce,” Jin stated, “as it continues to rapidly develop, becoming the primary channel through which young people purchase wine, and significantly eating into the traditional distributor’s market share.”
The competition is intensifying, with premium wine sales particularly impacted in recent years. However, niche categories are finding their footing among smaller eateries and wine bars, observed Juanita Yu, Marketing Director of EMW Fine Wines.
“In the restaurant channel, wines priced between RMB 300-600 per bottle perform best, with those over RMB 1,000 experiencing a noticeable decline. Restaurant consumers highly regard the terroir, reputation, and brand awareness of wines, areas where South Australia consistently excels. The rise of wine bars reflects an expanding enthusiast community and they have shown a preference for ‘light, fruity, white’ wines.”
Yu highlighted that prior to 2019, Australian wines ranked within the top five sales categories at EMW, with South Australian red wines making up 70% of total Australian wines and accounting for 60% in the on-premise channel.
With the imminent Australian wine return, the majority of five-star hotels and upscale restaurants plan to reintroduce Australian wines, particularly South Australian wines, she revealed. Despite a trend toward reduced wine spending, Yu emphasized the importance of local adaptation and targeted marketing to engage young consumers effectively.
“Although there’s been a shift towards lower spending, it doesn’t mean people are spending less, rather the average spend per customer has decreased. Young people are turning to Xiaohongshu and TikTok over traditional search engines like Baidu for information, necessitating our promotional efforts to be more localized,” she explained, referring to the popular Chinese social media likened to “China’s Instagram.”
Retail wine sales have also seen a downturn in recent years, with 1919, one of the country’s largest wine and spirits retailers, particularly feeling the impact. Giving an example of wine retail contraction, Jiang Changyu, Chairman and General Manager of the 1919 Supply Chain Platform, compared 1919’s wine sales data between 2013 and the pandemic years.
In 2013, wine sales through the 1919 retail channels took up over 20% of its total drinks sales. From 2019 to 2023, the share of wine sales in the retail channel significantly decreased, by more than two-thirds, equating to around 6.7% currently.
The drop in wine sales was the sharpest among all categories. During the same period, imported spirits saw a 0.5% decrease, beer increased by one point, and Baijiu experienced the most significant growth, according to Jiang.
“The comparison of data from 2013 to 2023 showed a significant drop in customers purchasing more than two boxes of wine. More than half of the retail customers now buy less than six bottles at a time, primarily for personal consumption, with business-related purchases notably decreasing,” Jiang explained.
“The comparison of data from 2013 to 2023 showed a significant drop in customers purchasing more than two boxes of wine. More than half of the retail customers now buy less than six bottles at a time, primarily for personal consumption, with business-related purchases notably decreasing,” Jiang explained.
He attributed this to the wine industry’s less precise consumer targeting compared to Baijiu and imported spirits, and the absence of a pricing benchmark, making consumers hesitant to choose wine for business occasions.
