The most popular price ranges
The top countries for imported wines on JD.com are led by France and followed by Australia, Chile, Spain, Italy and America. The most popular price ranges on the online retailer, according to Zhao, are ‘under 50RMB’ and ‘50-100RMB’.
The ‘under 50RMB’ tier is dominated by Spanish table wines. Among wines priced 50-100RMB, consumers can find entry-level wines from the Domaines Baron de Rothschild (Lafite) and branded wines such as those from Penfolds Rawson’s Retreat, Yellow Tail and Casillero del Diablo of Concha y Toro.
The range of ‘100-200RMB’, however, showed the most significant growth among JD.com’s self-run brands, said Zhao.
‘We work as an importer and retailer at the same time, so we won’t add too high margins. This is a very popular price range in the general market as well.’
JD.com is also keen to develop its fine wine portfolio, namely those priced at 200 to 500 RMB. The sales during 2015 and the Spring Festival period in 2016 showed the potential of these wines.
‘None of the online retailers would satisfy on selling only the entry-level wines. We need to go upstream.’
The effect of the austerity policy
‘The austerity policies have brought no negative effect to JD.com what-so-ever; if anything, it was beneficial to us,’ said Zhao.
‘The anti-corruption drive mainly tackled the mid-to-higher range products. JD.com, on the contrary, is a retailer targeting the mass consumers.’
The bubbles of the mid-to-higher range have now burst, bringing the price back to the reasonable range. ‘More and more people were looking for value-for-money wines, which was great news for us,’ said Zhao. ‘While overall the industry struggled to grow, we managed to triple our wine sales from 2014 to 2015.’
Choosing the right supplier
Now five years in the wine business, JD.com believe its biggest challenge comes from the supply chain.
The suppliers can’t necessarily foresee the scale of the sales, thus may struggle to prepare enough stock for the fast-growing retailer, said Zhao.
Facing such challenges, in 2016 JD.com intend to re-evaluate its 1300 wine products by regions, and to focus its resources on fewer but better brands and suppliers. However, the adjustment should not interfere with the growth, Zhao said, ‘we should be able to keep growing at the rate of 300% to 400% (per year).’
Speaking about China’s wine market in 2016, ‘I don’t expect an explosive growth,’ said Zhao.
‘We still don’t have enough wine consumers in China, which is why we need to encourage more consumers to start drinking wine. Meanwhile, we need to further control the distribution costs, and provide down-to-earth prices to consumers.’
Coming next month:
JD.com: Controlling the authenticity and quality of wine products
Translated by Sylvia Wu / 吴嘉溦
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