On­line wine seen as the new gold mine in China

China Daily (Canada) - - SHANGHAI - By XU JUNQIAN in Shang­hai


When Xie Chen first be­gan to sell im­ported wine on Taobao.com, China’s largest on­line mar­ket­place, in 2013, he had lit­tle clue where and who his cus­tomers would be.

Less than three years later, the 30-year-old has man­aged to sell be­tween 10,000 and 30,000 bot­tles of wine ev­ery month on his on­line store called Mihu Wine Shop, which trans­lates to “a lit­tle dizzy” in Chi­nese.

“That’s the magic of e-com­merce. The cus­tomers may be in­vis­i­ble and im­pos­si­ble to lo­cate at first, but once you reach them and speak to them us­ing the right lan­guage, it’s also im­pos­si­ble to lose them,” said Xie, who was for­merly a sales­man at a multi­na­tional chem­i­cal com­pany.

The cus­tomers Xie have at­tracted are mostly young fe­male pro­fes­sion­als who are still in search of their pre­ferred wine in­stead of dis­cern­ing con­nois­seurs. As such, he is mind­ful of how he com­mu­ni­cates with his au­di­ence.

“We don’t talk about how to hold the wine glass, how to tell the dif­fer­ence be­tween new world and old world pro­duce, or ter­roir. It’s sim­ply point­less,” said Xie.

In­stead, he pro­vides prac­ti­cal tips such as the brand of Moscato that is best paired with spicy chips for a re­lax­ing week­end movie night and the most value-for-money Sau­vi­gnon that peo­ple can use as a gift for an im­por­tant oc­ca­sion.

A re­port by the Chi­nese Busi­ness Net­work Data showed that nearly half of China’s mil­len­nial gen­er­a­tion — those born be­tween 1984 and 1995 — pri­ori­tise on­line chan­nels for pur­chases of wine and other types of al­co­hol.

This gen­er­a­tion of mil­len­ni­als, which has an es­ti­mated pop­u­la­tion of 48 mil­lion, has also demon­strated a grow­ing in­ter­est in drink­ing wine dur­ing so­cial oc­ca­sions and as a per­sonal treat, a stark con­trast to the older gen­er­a­tion which still fa­vors bai­jiu.

The re­port found that con­ve­nience and value for money are the two pri­mary rea­sons the younger gen­er­a­tion are turn­ing to wine. Fur­ther­more, UK con­sul­tancy Wine In­tel­li­gence dis­cov­ered that the num­ber of peo­ple who rank qual­ity as their top pri­or­ity rose from 14 per­cent in 2014 to 26 per­cent in 2016, sug­gest­ing that the mar­ket is be­com­ing more so­phis­ti­cated.

Wang Yanyan, ex­ec­u­tive ed­i­tor and re­searcher with Shang­hai In­ter­na­tional Wine Ex­change Cen­ter, no­ticed that al­co­hol com­pa­nies and e-com­merce sites have since 2015 been strik­ing up more part­ner­ships.

She added that al­co­hol com­pa­nies had iden­ti­fied the e-com­merce mar­ket as a means of com­bat­ing the de­cline of the in­dus­try, which was hit hard by two fac­tors: China’s anti-cor­rup­tion cam­paign and eco­nomic slow­down. Ac­cord­ing to the Na­tional Sta­tis­tics Bu­reau, the al­co­hol in­dus­try had for the first time in his­tory ex­pe­ri­enced a neg­a­tive 2 per­cent growth rate in 2014.

That same year, China’s al­co­hol mar­ket con­sol­i­dated 877.9 bil­lion yuan ($129.3 bil­lion) of sales, of which 1.25 per­cent came from the on­line mar­ket, based on fig­ures by e-com­merce con­sul­tancy Anal­y­sis In­ter­na­tional.

The e-com­merce mar­ket, how­ever, was seem­ingly un­af­fected by these two fac­tors as they con­tin­ued to en­joy ro­bust growth. In 2015, the size of China’s e-com­merce mar­ket reached 16.4 tril­lion yuan, up by 22.7 per­cent from the year be­fore. In ad­di­tion, on­line re­tail rose 36.2 per­cent year-on-year.

To­day, many e-com­merce al­co­hol re­tail­ers have been eager to en­sure that they only sell gen­uine wine and some even have lofty am­bi­tions of get­ting listed on the stock mar­ket. How­ever, Ian Ford, co-founder of Sum­mer­gate, one of China’s lead­ing wine im­port­ing com­pa­nies, has of­fered a more “sober­ing re­al­iza­tion” of the cur­rent sit­u­a­tion.

“There are still lots of peo­ple out there who want to buy wine from a hu­man be­ing, who want to go into a shop and hold the bot­tle, and who want to taste a se­lec­tion of wines be­fore they ac­tu­ally de­cide to buy. And this is not go­ing to go away,” said Ford, dur­ing a wine fo­rum held in Shang­hai.

Ford also re­ferred to Alibaba’s 9.9 Global Wine and Spir­its Fes­ti­val, which took place on Sept 9, say­ing that the event had not done as well as ex­pected, es­pe­cially for im­ported wine.

“Ev­ery­one that I know and have spo­ken to in the wine in­dus­try tells me that they didn’t sell very much im­ported wine dur­ing the fes­ti­val. There was a lot of buzz sur­round­ing im­ported wine but it was tra­di­tional Chi­nese wines that did very well in­stead,” said Ford.

“When you get such a re­sult even after hav­ing the most pow­er­ful guy in the In­ter­net world stand­ing up and declar­ing a global wine day and in­vest­ing the en­tire ef­forts of his or­ga­ni­za­tions, I think some real in­tro­spec­tion is re­quired,” he added.

Wen Wenyi contributed to the story.

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