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The first half of the year proved disappointing for China’s 10 publicly listed grape wine companies, as their combined profits were eclipsed by a single regional baijiu producer.
Between January and June, only three companies—Yantai Changyu Pioneer Wine, Citic Niya Wine, and Dynasty Fine Wines Group—reported profits in their financial disclosures. Half of these wineries generated less than 100 million yuan (approximately $14 million) in revenue.
Changyu Pioneer, which owns brands like Changyu, Noble Dragon, and Golden Ice Valley, led the sector with a revenue of 1.5 billion yuan (around $206.4 million), reflecting a slight 3% decrease from the previous year. Its net profit fell 16% to 190 million yuan.
The disparity between wine producers and other alcohol companies continues to widen. The 10 wine companies collectively earned 2.5 billion yuan in revenue, with total profits of just 120 million yuan. Meanwhile, Hebei Hengshui Laobaigan Liquor, a mid-sized baijiu firm in northern China, posted similar revenue but earned more than twice as much in profit. Out of China’s 20 listed baijiu producers, Laobaigan is ranked 13th in revenue.
Profitability also lags behind the beer industry. The total revenue of the wine sector was less than that of Zhujiang Brewery, based in Guangzhou and ranking sixth among listed beer companies, and mere fractions of what China Resources Beer Holdings, the industry leader, achieved during the same period.
The outlook for the remainder of the year remains bleak. Data from the National Bureau of Statistics shows China’s wine production in July dropped 25% year-over-year to 6,000 kiloliters. Production from January to July totaled 50,000 kiloliters, nearly 27% lower than the same period last year.
Weak Market Positioning of Luxury Products
Sun Jian, general manager of Changyu Pioneer Wine, remarked at a recent shareholders’ meeting that consumer demand for wine, considered a non-essential product, has experienced a “precipitous” decline amid economic challenges.
He further noted that insufficient investment in product development, sales channels, and marketing has contributed to wine’s marginalization within the domestic market.
Zhang Haixiao, founder of the wine warehousing company Yunjiucang, pointed out that part of the demand reduction stems from poor consumer education within the industry.
Zhang emphasized that wine should be integrated into everyday life and personal expression but criticized current educational efforts as more like “knowledge tests,” which alienate consumers from truly enjoying wine.
Unlike baijiu, which benefits from its strong social traits, and beer, which appeals to the mass market, wine occupies an awkward middle ground, Zhang explained. He mentioned that merchants have faced difficulties in both market positioning and brand development.
Yin Kai, founder of the liquor branding consultancy Chaoyinhui, told this outlet that after several years of decline, the prospects for a sharp drop in China’s wine market appear unlikely.
Yin stated that the main challenge now is for wine companies to survive this “industry winter” and develop strategies to attract new consumers into the market.
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