Mid-Autumn Festival: Gift sales expected to plunge as government buying drops

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Like-for-like wine sales during the upcoming Mid-Autumn Festival period are set to drop sharply due to an expected reduction in gift giving, say local Chinese wine merchants.

The Mid-Autumn Festival, this year on 8 September, is one of the peak times for gift giving in China. Alongside mooncakes, wines are seen as a proper gift for celebration. Historically, the period starting from Mid-Autumn Festival until the following National Day holiday (1st October) is seen as a peak season for wine sales.

‘In 2012, when the market was at its best, the sales of Mid-Autumn period plus spring festival made up half of our annual sales,’ He Liangjie, general manager of Boutique Wines, a Nanning-based importer, told DecanterChina.com.

‘Mid-Autumn day itself isn’t really a major festival, but it’s usually the start of gift purchase towards the end of the year,’ said Cao Jie, general manager of Wuhan-based importer Bifrost. ‘The period from Mid-Autumn day until the end of National Day holiday can make up 15%-20% of our annual sales.’

Last year, however, the number dropped to around 10%-12%, and Cao is expecting it to be less than 10% this year.

‘The main reason lies in the austerity measures which limits government spending. Before, our main clients were government departments, national organisations, the army and big state-owned enterprises,’ Cao Jie said.

‘This year, most purchases from these sources - at least 90% - have been suspended. Therefore from 2013, our major clients during festival seasons have shifted to mid-to-small-scale companies and private businesses.’

Ian Ford, general manager of Shanghai-based Summergate Fine Wines & Spirits, said it has noticed similar changes in the market.

‘Summergate’s sales to ordinary retailers and to online vendors increased 100% year-on-year,’ Ford told DecanterChina.com.

‘We can see a great shift here as the market moves from an era of government-led procurement and opportunistic profiteers to a market driven by genuine consumer consumption.’

Indeed the type of wines that distributors are currently stocking reflects this change in the market, say local merchants.

‘Distributors are more interested in lower-priced imported wines priced between 100-300 yuan (£10- £30). And as the profit margin for Bordeaux fine wines is usually not very high, retailers are tending to recommend other quality wines to their consumers instead,’ said He Liangjie.

‘2012 was the peak of Mid-Autumn wine sales. Then the market started to decline in 2013 and continued to drop in 2014, especially for classified Bordeaux,’ said Ryo Kasahara, Shanghai market director of Japan-based wine chain store Enoteca.

‘During this period, we noticed that though the price for every single purchase is reducing, there is actually much more entry-level wines sold.’

If Mid-Autumn retail sales were to drop, importers may suffer a significant reduction in sales during the spring festival period, as retailers will still hold plenty of left-over stock, He Liangjie predicted.

Longer term, however, as demands from personal consumption picks up, the market is expected to recover by 2017, importers envisage.

‘The market will pick up again as the economy recovers,’ said Cao Jie. ‘But possibly we’ll have to wait until 2017 for the market to get back to the level of 2012.’

‘This is a restructuring period, and only the serious and professional players will survive,’ He Liangjie concluded.

(Translated by 吴嘉溦/Sylvia Wu)

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