Flash Sale Frenzy: The Controversial Strategy Reshaping China’s Wine Market

In China, where imported wines have historically carried hefty price tags due to high taxes and opaque pricing, a surprising trend is reversing market expectations: the proliferation of flash sales. These e-commerce platforms are offering imported wines at prices significantly lower than their international counterparts, reflecting a major shift in the market landscape.

Driven by economic pressure and an oversupply of wine, these flash sales are becoming a lifeline for cash-strapped merchants while simultaneously posing challenges to wineries’ financial health and sustainable growth. According to industry experts, the recent downturn in the market has led to an excess of clearance wines, which these platforms are now selling rapidly at minimal prices.

It’s not clear the scale of the current flash wine sale, and there’s no official data on the sales.

However,Vinehoo.com, a wine retail platform operated by Chongqing-based Banniere, has emerged as a key player in this new market dynamic. As one of the companies highlighted in Vino Joy News’ “China’s Top 50 Wine Importers,” Vinehoo.com reported remarkable sales figures last year, totaling RMB 400 million (US$55 million), largely attributed to its aggressive flash sales strategy.

A search on the platform revealed Chateau Chauvin 2008 from Bordeaux’s Right Bank priced at only RMB 158 (US$21.7) a bottle, and a Cru bourgeois Medoc estate, Chateau La Gravette Lacombe 2015, priced at RMB 279.9 for a six-bottle case, which works out to RMB 46.65 (US$6.4) per bottle. Additionally, Ektimo Carneros Pinot Noir from California’s Sonoma is priced at just RMB 89 (US$12.2).

Comparisons on the Wine Searcher engine show that these flash sale prices are markedly lower than the wines’ international averages at RMB 285 (US$39.2), RMB 147(US$20.2), and RMB 211 (US$29) respectively, representing nearly 70% discount in the case of Chateau La Gravette Lacombe.

In China, the accumulative taxes on imported wine consist of tariffs, VAT, and excise tax, adding up to a total of 43%.

Defending the flash sale model, Eva Xia, the deputy general manager in charge of procurement at Vinehoo (Chongqing) Co., Ltd., stated that the company’s strong cash flow and extensive partnerships with over 500 wine importers as well as 500 wineries and producers allow for such competitive pricing.

“We currently have established cooperation with over 500 domestic importers as well as 500 overseas wineries and producers. The purchasing process involves tasting, price auditing, and designing campaign strategy. Additionally, the company’s strong cash flow and data support ensure proactive purchasing,” Xie told Vino Joy News.

Industry Backlash

Though the sales model has been effective in depleting old stocks and providing liquidity to cash-strapped wine merchants, it has drawn criticism for undercutting winery interests and disrupting agreed pricing strategies.

For years, Merveille Business has been selling boutique wines in China including wines from DBR Lafite group. Its CEO Li Yajun noted that a distributor breached an agreement by offering wines below agreed prices on Vinehoo.com.

Speaking to Vino Joy, he explained he had an agreement with a supermarket customer that stipulated that prices across all channels could not be lower than RMB 300/bottle. However, a dealer supplied the product to Vinehoo.com, and from time to time, a flash sale price of around RMB 200 would appear, undermining brand value and causing market confusion.

Claire Xu, the commercial representative for Italy’s esteemed Biondi Santi in China, echoed these concerns, after seeing her wines being sold at prices just slightly above CIF price. She has since received complaints from clients, causing her much headache.

“Although it can be determined which importer purchased the wine, the importer won’t admit to supplying the wine for flash sales, claiming it was the distributor. Furthermore, because flash sales are very fast and the products are taken down within two days, it’s very difficult to track,” said Xu.

The complaints from wineries and merchants underlined that if price disruptions occur frequently, it could cause brand devaluation, market confusion and a vicious cycle of price wars that eventually force merchants to opt out of representing the wine brand altogether.   

Despite these challenges, flash sales reflect the realities of a saturated Chinese wine market with no growth in volume, only stock.  

Li Yajun highlighted several key challenges in the Chinese wine market. Firstly, he noted that the market is saturated with no room for volume growth, only inventory, leading to inevitable price wars as businesses vie for existing market share. Secondly, he pointed out the slow consumption rates and excessive inventory held by merchants, necessitating aggressive promotion and inventory reduction. Consequently, prominent and efficient platforms are likely to attract numerous wine merchants eager to de-stock.

China’s wine distribution system is not strictly divided, and the market is highly fragmented, making channel stuffing and price wars quite common, and difficult to guard against.

It is worth noting that some of the extremely discounted wines on Vinehoo.com are not new vintages, such as the aforementioned Bordeaux Right Bank grand estate from 2008, the Medoc mid-level estate from 2015, and Sonoma wine from 2013, suggesting they are clearance items from large inventories held by many importers due to a downturn in consumer spending.

Eva Xia also frankly stated: “Currently, the overall consumption environment in the Chinese market is sluggish. In such a market environment, it is indeed easier to purchase some clearance products. But this also requires the purchasing team to have professional appreciation skills, to be able to select high-quality and well-conditioned wines, while the company also needs strong financial strength as support.”

Interestingly, the flash sale wine market is growing and Vinehoo.com is not the only leading player. Claire Xu identified several platforms doing low-price flash sales. Among them, Winebro Fine Wine WeChat mini-program follows a similar model to Vinehoo.com. A bottle of Bordeaux fifth growth Château Cantemerle was priced at RMB 199, much lower than prices found on China’s well-known e-commerce platform JD.com.

Wu Xianghua, CEO of Chengdu Fine West International Trade Co., Ltd., a leading wine importer also on the top 50 list, explains that flash sale e-commerce thrives by providing enticing content and prices, appealing to many wine enthusiasts. When the market is robust, these products don’t rely on flash sale platforms for sales. The growing variety of wines on these platforms mirrors the challenging consumer environment.