As premium wine import growth slows as a result of the Chinese government’s ongoing anticorruption crackdown, one online wine retailer has decided to go local. Originally founded with a focus on selling expensive imported bottles, Wangjiu.com is starting to produce its own wine in China in an attempt to break from its reliance on this slowing market segment.
Founded in 2011 by mobile media and technology company Leshi, Wangjiu.com announced this month that it has planted more than 30,000 vines over 67 hectares in the Yaodu district of Linfen city, in Shanxi in northern China.
China’s wine import market is still growing, albeit at a slowing pace, but a decrease in domestic wine consumption led to a decrease in overall consumption of 2.2 percent in 2013, according to a Vinexpo study presented this year. It is likely that Wangjiu.com is looking at long-term growth with its decision to step into domestic wine production. Domestic wine accounts for 82.7 percent of all still light wines drunk in China, and overall consumption is predicted to increase 33.8 percent over the next five years. China is now the world’s largest consumer of red wine, and is the fifth largest wine producer in the world.
“At the beginning we position ourselves as a high-end imported wine online sales platform, [but] now we are turning our e-commerce channels into a terminal for our various businesses,” Li Rui, CEO of Wangjiu.com, told China-focused wine site Decanter China. He said the company’s aim to control the production process from planting to distribution helps it to compete better against other domestic and overseas retailers.
Li told Decanter China that the financial support and distribution channels from parent company Leshi give Wangjiu.com an edge over its competitors, as domestic wine producers have been struggling with financial woes in the past year.
The Wangjiu.com vineyard project is expected to start producing wine in three years, and will be ready to sell to the market in seven years. The planted vines are imported, and include varieties such as Cabernet Sauvignon, Merlot, Cabernet Franc, Marselan, and Grenache. Li told Decanter China that he expects the wine produced from the Linfen site to be “easy to drink with varietal features.”
An earlier report in May by Chinese financial news site takung.cn says that the district of Yaodu, Linfen, is excited by Leshi’s wine agricultural venture in the region. In a Yaodu general assembly, mayor Wang Zhen presented a 30-page report welcoming Leshi’s viticulture investment. Li said at the assembly that the project will provide employment opportunities for over 3,000 local farmers, as well as a tourism boost for the region.