Wine sales in China’s affluent Guangdong province has plummeted to RMB 1.9 billion (US$262.9 million) last year, a year-on-year decrease of 36.6%, according to data released from the province’s official wine and drinks body.
To put it in perspective, the extent of contraction now means that the province’s total wine sales is just about 5% of its total Baijiu sales.
Guangdong Province is China’s biggest GDP growth driver, and the Pearl River Delta is one of the most dynamic economic regions in the country. The region, long influenced culturally by Hong Kong and Macau, has a high acceptance of wine and imported liquors.
In stark contrast to wine, other segments of the alcohol market in Guangdong showed growth. According to data disclosed by the Guangdong Provincial Alcohol Industry Association (GDAIA), the overall sales revenue from alcoholic beverages reached RMB 61.4 billion (US$8.49 billion), a modest increase of 4.95%. Specifically, domestic Baijiu sales rose by 8.76% to RMB 34 billion (US$4.7 billion), while domestic and imported beer sales increased by 5.71% to RMB 18.5 billion (US$2.55 billion). Imported spirits, however, slightly declined by 0.28%, totaling RMB 7 billion (US$968.6 million).
When it comes to detailed market make-up, the core cities of Guangdong Province—Guangzhou, Shenzhen, Foshan, and Dongguan—are the primary battlegrounds for alcohol sales, accounting for 50% of the province’s consumption.
Price Sensitivity
In response to the recent data on alcohol sales in Guangdong, Vino Joy spoke with frontline distributors to gauge the sentiment among merchants.
According to Feng Lihua, who has worked in senior management at multiple leading liquor companies and is currently a consultant to several wine companies, there is a noticeable shift towards more affordable alcoholic options across all categories, not just wine.
“For example, in the liquor chain I was part of, where expensive Hennessy Paradis once thrived, they might not be able to sell one bottle in a day, while cheaper alternatives like VSOP are now more common,” Feng explained.
This shift is mirrored in the baijiu market, where the falling prices of comparable products have forced even customized baijiu to be sold at reduced prices, he added. Hennessy Paradis normally sells over RMB 10,000 (US$ 1383) a bottle in China retail platforms, while a Hennessy VOSP in 500 ml bottling sells for around RMB 500.
As for why the data shows an increase in baijiu sales, a liquor merchant in Guangzhou who operates several liquor chain stores and wishes to remain anonymous suggested that the Baijiu sales might be overstated. “The complexity of tracking intermediary sales means that much of the data might be extrapolated from surveys of baijiu producers, not reflecting actual consumption,” he explained.
Feng also believes that the growth in Baijiu sales in Guangdong Province may be related to the decline in wine sales. He stated, “The cost of getting drunk on Baijiu is lower than that of wine—a bottle of Baijiu may not cost much more than a bottle of wine, but can be shared with several people, so many former wine drinkers have been lured away by mid-priced Baijiu.” Baijiu’s alcohol strength is much higher than wine (normally 53% abv v.s. 14% abv).
Feng pointed out: “In the wine sector, those who drink premium wines are still around, at most there has been some downgrading. But many former mid-to-low-end wine drinkers were simply following trends, and they may not have been so loyal to wine. Now, they have switched categories for the above reasons.”
Despite the overall decline in premium wine consumption, Feng noted that the core market for high-end wines still exists, albeit with some downgrading and the exit of entry-level wines might be reasons behind the reduction. “Many who once favored mid-to-low-end wines were not particularly loyal to the category; they have now switched to other types due to the reasons mentioned above,” he stated.
This trend towards more budget-friendly options is reflected in the broader market data from the GDAIA. In 2023, sales revenue from premium alcoholic products (above RMB 600) fell by 2.9% to RMB 16.5 billion (US$2.28 billion). Conversely, revenue from mid-priced products (RMB 100 to 600) rose by 11.56% to RMB 19.3 billion (US$2.67 billion), and low-priced products (including beer, priced under RMB 100) saw an increase of 5.47% to RMB 25.6 billion (US$3.54 million).
Strained Traditional Channels
Guangdong Province, a major hub for wine sales in China, faces a complex situation. The market is saturated with numerous wine merchants selling OEMs, leading to a diminishing consumer base that was once cultivated by these merchants.
Liu Anqi, the China region manager for DAVIDWINE, describes a market under strain from various economic pressures. In recent years, the poor economic climate has led to reduced business activities. Additionally, many traditional channel liquor merchants, offering products that lack brand strength and are not price competitive, find it increasingly difficult to compete with vertical businesses like Sam’s Club, he explains.
He further notes that traditional liquor channels are undergoing a transformation. “Many wine merchants, once active in these channels, are becoming more like speculators, pivoting their business strategies or switching industries entirely due to the challenges in managing wine sales. This shift has contributed to the gradual decline of what was once a mainstream channel for wine distribution,” Liu adds.
Vino Joy has observed a similar reticence among formerly prominent wine importers in Guangdong. These importers have become more conservative, rarely engaging in activities like launching new products or conducting promotions. Some have shifted their focus to Baijiu, while others have completely ventured into different industries altogether.
A significant factor exacerbating these trends is the absence of Australian wines, which have traditionally been favored by Guangdong consumers. The local liquor merchant from Guangzhou speculated that Since Australian wines disappeared from the Chinese market in 2020, and with stocks nearly depleted by 2023, many consumers have been compelled to explore other categories.
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