China’s Gigantic Wine Market Goes Digital

Chinese wine e-tailer's fundraising success comes in the light of China's booming wine retail industry. (Jiuxian)

Chinese wine e-tailer Jiuxian’s fundraising success comes in the light of China’s booming wine retail industry. (Jiuxian)

Wine buyers in China are getting savvier, and with half a billion mobile internet users, more are preferring to make their purchases online rather than at a brick-and-mortar store. A recent announcement by Jiuxian, one of China’s largest wine specialist e-commerce sites, highlights this trend: the company has secured 420 million yuan ($69 million) in new funding this year, underscoring the blazing growth wine e-tailers in China are experiencing despite previous skepticism about their chances for success.

According to Tech In Asia, Jiuxian, which sells red and white wines, Champagnes, and spirits from around the world—including Chinese baijiuraised 420 million yuan over two simultaneous fundraisers, with investors including asset management companies Richland Capital and Oriental Fortune Capital.

The e-tailer’s success was announced in light of the news that China has overtaken France to become the number one consumer of red wine in the world.

The rise of online wine sales is tied to China’s rapidly rising mobile internet penetration, where 500 million of its 618 million internet users, about 80 percent, accessed the internet via mobile devices, according to figures released by in January by China Internet Network Information Center (CNNIC).

The growth of Jiuxian and online wine sales in China defies expert predictions. In 2009, the CEO of international wine exhibition VINEXPO Robert Beynat dismissed the internet as a viable platform for selling wine. “It is not a circuit for wine sales, the internet will always be marginal, and it will stay that way,” said Beynat at the exhibition in Bordeaux, predicting that online wine sales will top 8 percent of global sales at most. Little did he know that recently in China, online wine sales accounted for 27 percent of all wine sales in 2013, according to estimates from France-based Bordeaux Management School.

Jiuxian president Hao Hongfeng told Chinese tech news site Tech QQ the company now has distribution centers in Beijing, Shanghai, Guangzhou, Tianjin, and Wuhan, and they cover 2,000 Chinese cities and counties. Their fundraiser aims to set up distribution centers in every provincial capital in the next few years in order to speed up delivery.

Not only are Chinese wine merchants peddling their wares online, but foreign merchants are also looking toward China’s internet marketplace as they become aware of the trend. Amazon began offering Californian wines through its Chinese portal in 2013, according to China Daily. The article reports that Californian wine exports to China hit an all-time high of $35 million last year, making it the fifth-largest export market, according to Linsey Gallagher, vice president of the Wine Institute, a Californian wine advocacy group.

These days, Beynat is singing a different tune regarding online wine sales. “We will probably see corner stores disappear eventually,” Beynat told Reuters, mentioning that brick-and-mortar wine stores are in decline everywhere except China. According to VINEXPO, the rise of wine e-tail in China is just getting started: in a 2013, report, the organization predicted that online wine sales in China will grow by 47 percent by 2020.

 

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E-Commerce, Food, Wine, & Spirits, Industry Sectors, Investment & Real Estate, Tech