JD.com and Penfolds Bet Big on Future of China’s Fine Wine E-Commerce Market

JD and Penfolds

The launch event for the JD.com and Penfolds extended partnership. (Courtesy Photo)

As China’s oenophiles search for ways to purchase top imported vintages without the fear of rampant fakes, JD.com is expanding its partnership with Penfolds in order to cash in on surging demand for online wine sales.

On May 4, the Chinese online direct sales company announced that it has expanded its cooperation with the Australian winemaker as it will become the first e-tailer to offer the new Penfolds Max’s wine range in China. Penfolds chose China as the second global location after Australia to offer the new wine collection, which was created in tribute to former chief winemaker Max Schubert.

Demand for wine e-commerce is already significant in China—in 2015, the number of bottles sold on JD.com doubled from the previous year to 22 million. The e-commerce giant launched wine sales five years ago and currently sells imported wines from 12 different countries, including France, Australia, Chile, Spain, Italy, and the United States. Demand for Australian wine is particularly strong, as JD.com’s president of the Fast-Moving Consumer Goods Business Unit Carol Fung says that “Penfolds has long been one of the top selling brands on JD.com.”

While the convenience of online ordering plays a part in spurring demand—the company offers same- and next-day delivery service—one of the main reasons likely driving the surge in online wine sales is the guaranteed authenticity offered by an official partnership. Fake foreign bottles plague China’s wine market, making it hard for consumers to trust brick-and-mortar locations when looking to pay for expensive brands. Peter Dixon, the general manager for North Asia of Penfolds brand owner Treasury Wine Estate says that the company chose JD.com because it is “one of the country’s most trusted online platforms for authentic wines.”

The next step for JD.com’s imported wine business will be to start offering wine brands on its JD Worldwide cross-border e-commerce platform, which will allow Chinese online shoppers to ship bottles directly from wineries abroad. This comes at a time of change for the cross-border e-commerce industry in China—as orders abroad have surged in recent years thanks in part to lower prices than at domestic brick-and-mortar locations, the Chinese government recently introduced a new tariff policy that effectively raises taxes on most goods ordered online that are shipped from abroad into China. 

The announcement comes as JD.com and competitor Alibaba work hard to attract foreign luxury brands to both their domestic and cross-border platforms. JD.com has recently held promotional fashion shows at both New York Fashion Week and Milan Fashion Week, and has signed deals with high-profile brands such as Luxottica and Sephora. Meanwhile, Alibaba’s Tmall has also been working to get more labels to join fashion brands like Burberry and Calvin Klein in launching official shops, and recently held a star-studded fashion show to promote its new “Luxury Channel” launched in partnership with Mei.com.

Whether they’ll be ordering more wine through domestic or cross-border e-commerce channels, China’s online shoppers are increasingly turning their tastes toward imported premium wine brands, says Fung. “Chinese consumers have developed an increasingly sophisticated palate for wine, and we are continuously expanding our offerings with world-class brands like Penfolds to meet this demand.”

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E-Commerce, Food, Wine, & Spirits, Industry Sectors, Tech