Source: New Marketing
In recent years, the continued decline in the wine market has not only been a digital decline, but also a profound crisis for the entire industry.
The uncertainty of the global economy has had a huge impact on all industries, with the wine industry bearing the brunt. The combination of inflation, sluggish consumption and supply chain disruptions has caused the wine market to suffer an unprecedented blow in a short period of time. China, Asia's largest consumer, saw its wine consumption plummet by 24.7% in 2023. According to the China Wine Industry Association, the sales revenue of domestic wine decreased from 42.1 billion yuan to 9.09 billion yuan between 2017 and 2023, and the total profit also decreased from 5.2 billion yuan in 2015 to 220 million yuan in 2023. Judging from market feedback, the sales revenue of a large number of terminal wine merchants in the first quarter of this year continued to decline, and some of them even reached about 30%.
Changes in global wine consumption from 2000 to 2023, source: OIV
In the past few years, due to poor logistics, a large number of imported wines have been backlogged in ports and warehouses. Many businesses have to sell at low prices in order to clear their inventory as quickly as possible. At the same time, in order to compete for market share, there is also a fierce price war between brands. Especially on several major domestic e-commerce platforms, consumers are more sensitive to prices, and brands attract consumers through promotions and subsidies, and sell at low prices to further drive down market prices. Although this price war increases sales in the short term, in the long run, it compresses the profit margins of enterprises and damages the high-end image of the brand.
So, in the face of the continuous market downturn, what is the way out for wine e-commerce?
There is an imbalance between supply and demand, and the en primeur "can't play anymore"
There is an imbalance between supply and demand across the wine market, and this is particularly evident in the annual Bordeaux en primeur sales. En primeur is a wine that is sold in a future delivery before it is fully made. This model allows buyers to purchase high-end wines at relatively low prices before the official release of the wine. However, in recent years, the performance of the en primeur market has not been satisfactory.
The latest figures show that the price of en primeurs at top châteaux such as Lafite and Mouton has fallen by more than 30%. In fact, in four of the last five vintages, the market price was lower than the en primeur launch price. Pavie led the way among the 10 largest decliners, with an average drop of 28% over the past five vintages. Among them, Bai Fei 2018 fell the most, with a listing price of £3,504, and now the market price is only £2,258, a drop of 36%. At the same time, the market is flooded with a large number of vintages from past years, and the supply far exceeds the demand, with more than three times the demand for Bordeaux for sale.
Source: Liv-ex
"How to play in the Bordeaux market? I feel that I can't play at all, and in order to promote spending power, some wine merchants even give you a discount on a case of en primeur. Ms. Wu, a wine practitioner, lamented that the oversupply in the market and the continuous decline in prices have made many high-quality wines fail to maintain their value in the secondary market, and consumers' interest in en primeurs has gradually weakened. Finding a balance between quality and market demand, and avoiding further price declines due to oversupply, is a challenge for the entire wine industry in the current economic environment.
What was once seen as a high-return investment channel has now become bleak, and more consumers are beginning to shift their demand for alcohol from investment to consumption. "Globally, people are more likely to buy affordable, reliable wines to drink and enjoy on a daily basis, rather than sitting in the cellar waiting for their value to appreciate." Ms. Wu said that this shift in consumption trends has made wine at affordable prices more popular, and market demand has shown a significant downward adjustment.
The sluggish performance of the en primeur market has had a knock-on effect on the entire wine supply chain. Many high-end wines have overstocked stocks, forcing producers and distributors to look for new ways to sell them. In particular, e-commerce channels, as an important consumption port, must face the changes in this supply chain and re-examine their market positioning and product strategy.
At present, there are four main categories of wine e-commerce operations:
- High-end wines: mainly some famous wines and top wines, usually with higher prices, and the consumers are mainly veteran wine fans and collectors. The sales of this type of wine are greatly affected by the performance of the en primeur market.
- Mid-range wines: include some well-known brands as well as domestic wines of better quality. Positioned between the high-end and mass markets, these products are affordable and suitable for a wide range of consumer groups.
- Wines for mass consumption: Affordable and reliable wines for everyday consumption. The consumer demand for this type of wine is on the rise, especially on e-commerce platforms.
- Low-alcohol and non-alcoholic wines: With the rise of healthy lifestyles, this category has grown rapidly in recent years, appealing to consumers looking to reduce their alcohol intake.
In the downward market environment, no matter what type of wine e-commerce, it is necessary to break the inertial thinking of the past and actively adjust the product portfolio and marketing strategy. For example, for wine e-commerce companies in the mass market, increasing the variety of wine with affordable prices and reliable quality can adapt to the changes in consumer demand; For wine e-commerce companies in the high-end market, it is also necessary to explore more innovative and differentiated marketing strategies in order to attract more consumers' attention and recognition.
来源：London Wine Competition
Continuing to break prices, can e-commerce promotions drive sales?
According to industry insiders, in the past year, wine has shown a continuous trend of price reduction on e-commerce platforms.
During the 618 event promotion, major e-commerce platforms also competed to launch large discounts, and some well-known brands of wine even had a rare "price breaking" situation: the original retail price of 275 yuan / bottle of Sauvignon Blanc Sauvignon Blanc was only sold for 203 yuan on Tmall and Jingdong during the event; The original retail price of Moët & Chando Champagne was 399 yuan, and the subsidized price on Tmall was 277 yuan, and the subsidized price on JD.com was 289 yuan. Some cross-border importers even offer lower-priced wine products on e-commerce platforms. They have attracted the attention of many consumers through large purchases and low-price supply.
"The price war for wine has been going on for some time, not just from 618, and not just from e-commerce platforms. Including in the wine market of various offline channels, the purchasing power of consumers has also weakened. In response to this situation, many wine e-commerce companies have adopted more aggressive pricing strategies and more diversified promotional methods. Li Peichen, a senior practitioner of wine e-commerce, told New Marketing that despite this, the sales of most wines have not increased significantly.
Compared with shelf e-commerce, Douyin's sales performance is relatively stable, "It is still in a relatively controllable state, although with the increase in procurement traffic, it may lead to an increase in costs." Li Peichen said. As Douyin encourages merchants to mark the "low price of the whole network" and launches more live broadcast rooms with good prices and low prices, more and more merchants will also consider "exchanging price for volume", that is, exchanging reduced profits for more organic traffic, rather than blindly "buying volume". The platform can also use this to establish its own "low-price moat" to attract more consumers to form a closed loop of conversion.
In Douyin's domestic wine hot list, based on the comprehensive ranking of real sales in the past 30 days, the 99 yuan/bottle of drunken goose lady Snow Country Forest domestic ice wine has dominated the top three for more than 25 days. According to Li Peichen, before 2021, this wine was once cut due to cost and sales reasons, and it was not until 2023 that the drunken goose lady re-launched this product, giving new life to the product by negotiating costs with partners, adjusting pricing, and redrawing packaging.
"Compared with low prices, today's users value the quality-price ratio more. They are becoming more and more disenchanted with the brand, and they are no longer simply concerned about the brand's popularity. But if it's a good enough product, they're still willing to pay the cost, and I think that's why Snowpiercer sells out. Li Peichen said.
A simple "price break" may not be able to drive the growth of sales, but for wine e-commerce, high-quality products coupled with reasonable pricing still have more opportunities to stand out in the market and win the favor of consumers.
Break the inertia and seek a way out from new channels and new categories
A feasible idea is to control the "price breaking" within the scope of the private domain, such as WeChat community group buying mini programs such as Kuaituantuan.
Li Peichen said that the participating users of Kuaituan are usually people with certain social relationships, and friends have similar consumption minds, which is a closed consumer group compared to other platforms, and they are often more willing to share and buy on the premise of enjoying discounts. "This kind of closure helps to control the sales scope of the product and avoid affecting the brand tone of the public domain." In addition, the relatively closed nature of private domain mini programs such as Kuaituan Tuan also means that merchants can more easily control marketing costs and obtain better profits.
Source: Brother Bird's Notes
Another feasible idea is to expand more on the basis of the original category and in the low-cost category and packaging.
According to Eric Kunisawa, founder of Grappos, a local service finder and a veteran wine expert, the rise of low- and no-alcohol wines not only meets the needs of consumers who want to reduce their alcohol intake, but also caters to the trend of healthy lifestyles. In recent years, the market has shown explosive growth, with many wine producers investing in R&D and production in order to gain a foothold in this emerging market.
Wine packaging is also becoming more and more diverse. In the past, wine was almost synonymous with glass bottles, but now, ready-to-drink and canned wine has become the drink of choice for many younger generations and outdoor enthusiasts. In scenarios such as beaches, camping and picnics, canned wine is undoubtedly more portable and more in line with the "light life" lifestyle pursued by young people.
Source: egwineco.com
In addition, with the arrival of summer, many low-alcohol "dessert wines" have become hot sellers again. For example, France's Rousson "Burst Juice Sweet Red Wine", Italy's "Angel's Hand" sparkling wine, as well as domestic Muramoscato lychee-flavored sparkling wine and Mogao Sauvignon Blanc wine, are all hot sellers in Tmall Supermarket recently. Wine e-commerce merchants can also highlight the refreshing and fruity characteristics of these categories in response to summer demand, and at the same time combine beautiful pictures and interesting stories to attract more consumers' attention and drive sales growth.
Overall, in this era, consumers' tastes and buying habits are constantly evolving, and their demand for quality, innovation and personalization of products is increasing. Therefore, wine e-commerce must also have the courage to try new channels and categories to meet these changing consumer needs.