Alibaba invests US$290m in online drinks retailer 1919.cnBy Natalie Wang
China’s e-commerce giant Alibaba will inject RMB 2 billion (US$288.3 million) worth of investment into Chengdu-based online drinks retailer, 1919 Wines & Spirits, tapping into the liquor specialist’s more integrated services from retail distribution network to wine storage to drive the country’s alcohol sales.
This would give the Alibaba Group 29% of its shares, making it the second biggest shareholder of the alcohol specialist headquartered in China’s southwestern Chengdu city.
The investment will be allocated to expand 1919.cn’s presence across China, part of which will include opening 2,000 new retail stores in the coming year, the company said in its filing this week.
In addition to online and offline sales, 1919.cn is well versed in mobile and app promotions, launching online sommelier services by order and instant wine delivery services for selected cities in 19 minutes.
“The wine and beverage industry is a trillion-dollar market, which is a great fit for promoting Alibaba’s new retail strategy to keep pace with the fast-moving business,” Hu Weixiong, the president of Tmall’s retail department, was quoted as saying.
Despite China’s mega alcohol market, majority of which is the Chinese spirit, baijiu, e-commerce channels only account for around 5% of the whole country’s alcoholic beverage sales, as dbHK previously explored in last year’s April issue.
“After teaming up with Alibaba, the company will try to integrate its online and offline business better,” said Yang Lingjiang, founder and chairman of 1919 Wines & Spirits.
In 2016, 1919.cn’s revenue reached RMB 2.9 billion (US$418 million), and by the end of 2017, the value grew to RMB 3.3 billion (US$475 million). Its turnover in 2019 is projected to reach RMB 7 billion based on a projected growth rate of 55.56%.
Founded in 1998, 1919.cn positioned its growth strategy first from its base in southwestern part of China and then lower tier cities before expanding into eastern and coastal cities like Shanghai and Beijing, giving the company an edge over wine merchants who struggle with distribution in southern and western part of China.