China booze prices slump in September

Alcohol bosses pay lip service to the mantra that they “must win” in China and that the People’s Republic is a long-term banker because of its burgeoning middle class and growing prosperity. In the short term, however, not all is rosy. Ron Emler reports.

Figures from China’s National Bureau of Statistics show alcohol prices have been falling for months, weighed down by weak consumer demand and distress sales. Cognac producers, who Beijing forced earlier this year into agreeing to a minimum import price to avoid even more punishing tariffs, are among the sufferers.

Alcohol prices to the consumer in August were 0.2% lower than in July and fell by 1.9% from August 2024. And it is not just imports that are being affected; the slump is across the board, even hitting prized brands of baijiu, the national beverage.

Feitian Moutai has long been the benchmark, but Vino Joy News reports that the baijiu that has previously sold for more than RMB 3,500 (£360) a bottle can now be had for RMB 2,000 (£205).
Imported wines are facing similar problems, with many brands fetching retail prices that undercut wholesale costs.

TWE and parallel importing

The report says that Treasury Wine Estate’s Penfolds’ Bin 407 has been hit by parallel importing. On JD.com and Walmart’s cross-border platforms, the wine sells for RMB 607.9 a bottle, compared with RMB 880 on its official flagship store.

Some of the parallel imports may be the result of TWE developing wider Asian markets while China effectively remained closed between 2021 and 2024.

Moet Hennessy’s Cloudy Bay Sauvignon Blanc is priced at RMB 337, while parallel-imported stock can be had for RMB 184 — a discount so deep that offline retailers can barely compete. Retailers are left with a dilemma of either selling stock at below cost or sitting on excess inventory, tying up capital.

Online discounts are ‘liquidation sales’

“The economy is poor, consumption is weak and alcohol is harder to sell,” Wu Yunping, president of the Shenzhen Wine Association and operator of a cross-border wine e-commerce business, is reported as saying.

“Merchants are dumping stock at a loss to free up cash. Many of the cheap wines you see online are liquidation sales.”

He cited Château Cantemerle as an example: “It costs RMB 220 to source, but on cross-border platforms it’s priced at RMB 185. That’s a guaranteed loss. But consumers only look at price, so naturally they buy the cheaper one. Over time, this makes it even harder to sell at normal margins, creating a vicious cycle.”

‘Anti-Chinese policies’

Meanwhile, Beijing has issued a veiled warning to Australian wine growers that it will not be averse to reimposing punitive tariffs if the Canberra Government continues to pursue policies it finds “anti-Chinese”.

It is less than two years since the 200%+ tariffs were lifted after causing chaos by effectively closing Australia’s biggest wine export market.

Now, Beijing has warned that it is looking unfavourably at Australia’s strong defence ties, especially to the US, warning that Australia cannot face both ways at the same time.

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