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Why Premium Wines Not Sold in China ? - A Distribution Structure All Wine Merchants Must Know

December 15, 2016

 

To most international wineries who have successfully introduced their wine products and entered the China wine market, they would know that the most salable products are those entry-to-mid level wines, that means, in terms of pricing, those with a price tags from @EUR 2,00 to EUR 5,00/bottle (excluding those OEM wines generally with a pricing below @EUR 2,00/bottle, the lowest could be down to 60 to 70 Euro cents per 75-cl bottle).

 

These ex-cellar @EUR 2,00 to EUR 5,00/bottle wines, plus the aggregate tax (custom duty, excise tax, value-added tax), after converting to Chinese Yuan (CNY), would generate a Chinese price cost from CNY 25 to 60 per bottle.  Upon reaching the hands of consumers (through 1, 2 or more levels of distribution), the end-user price would be up to CNY100 for the 25 Yuan cost wine, and CNY250 for the 60 Yuan cost wine, that is almost 4 times of the landing cost to China, or 6.7 times to the ex-cellar pricing.  One more thing, the original price tags would be even higher than these, because Chinese wine merchants always like to use the kinds of gimmick to offer special discount to consumers,  e.g. buy one get one free, clearance sale, … etc.  So your @EUR2,00 -per-bottle wine may have a price tag up (or close) to CNY200 (that is EUR 27/bottle).  And, It is not un unusual case, with an additional cost of a wooden box (approximate 10 yuan or EUR1,35), this wine could be priced up to CNY300 per bottle or more. 

 

Following this pricing structure, an EUR10,00/bottle wine would need to price at around CNY650-700/bottle and eventually sold at the price between CNY400-500, which drops into the tracks that either a). consumers who have no wine knowledge would not pay that much to buy these wines, they are worrying whether these wines are not famous brands, or are they fake or counterfeit, … etc. or b). to those who have the knowledge and grasp the information channel (e.g. wine-searcher.com), they know these wines are over-priced and not worth for the value of money.   So international wineries and wine merchants will encounter a hurdle that they never succeed to bring their premium wines into the Chinese market (which are something that helps to really build their brands and market position in long run).

 

Due to the current abnormal market structure, Chinese consumers could not really enjoy high quality, sophisticated imported wine and international wineries and wine merchants could not capitalize and benefit from their marketing investment into China.

 

ChinaWineBusiness.com, working with an investment fund, will soon launch a wine business project which would overcome and help international wineries and wine merchants to deliver directly their premium wines to the glasses of these knowledgeable Chinese wine drinkers.  Any interested parties could contact us at ChinaWineBusiness@gmail.com for further information.

 

TAGS:  wine-searcher.com, premium wines, OEM wines, aggregate tax, wooden box

 

 

 

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