Students in China are said to have selected November 11 as Singles’ Day because the number one digits in the date (11/11) represented the singleton life-style. Guanggun Jie, its name in Mandarin, says something similar, translating as “bare sticks festival”.
Later Alibaba hijacked the occasion, spotting a chance to boost business during the quieter period between Golden Week in October and Christmas.
Since then Singles’ Day has exploded into a bacchanalia of buying, generating $14.3 billion in online sales last year.
Perhaps that’s why Alibaba has been playing with the numbers for what could turn into another festival of frenzy – a ‘Day of Wine’ that it will celebrate on an annual basis, beginning at 9am on September 9th this year (i.e. the ninth hour of the ninth of the ninth month).
“‘Nine’ can sound like ‘wine’ in Chinese, so nine-nine-nine means wine-wine-wine,” Jack Ma, Alibaba’s founder, explained at a wine conference in Italy last month.
Ma has been busy himself in Bordeaux this year, buying Château de Sours (see WiC312). His decision that Alibaba should dedicate a day to wine in September will cheer winemakers, even if it delivers only a fraction of the returns of its November equivalent.
The world’s wine producers have been turning back to the Chinese market after a difficult period. WiC has chronicled this story in more detail in its Little Red Book series. The wine trade started out in China by focusing on sales of the finest bottles to wealthy collectors and investors. There was a tremendous boom, especially for the best wine from France. But the leading brands from Bordeaux got greedy, hiking prices to record levels at a time when the economy was starting to grow at a slower rate. Interest began to evaporate, and then came Xi Jinping’s campaigns against graft and extravagance in the public sector, pole-axing what was left of the fine wine sector.
Now the market is recovering, anchored by much wider demand for reasonably priced bottles. These new customers are buying wine to drink rather than to gift it to rapacious officials or speculate on surging prices. One of the features of ‘Wine 2.0’ – as this newer landscape is often described – is the role of online sales platforms, including the wine divisions of e-commerce majors like Tmall and JD.com.
Alibaba’s closest rival JD.com sold 22 million bottles online last year, double the amount for 2014. It imports wine from overseas and sells it directly, as well as running online malls in which wine merchants host their own shops. Sales from the merchants – which make up the bigger share of revenues – are expected to reach Rmb1.5 billion ($230.4 million) this year. Yet Zhao Dabin, the company’s head of wine, says that the market is still in its early stages. Less than 4% of JD.com’s registered users are buying wine, he told Decanter China in March. Most of his customers come from Beijing, Shanghai and Guangzhou, leaving hundreds of untapped towns and cities.
Naturally, the international winemakers hope to profit as more Chinese drink wine at home and in restaurants. Figures for the first quarter show wine imports increased by a third in volume and by 42% in value on the same period last year.
French wine still tops the rankings but producers of New World wine from countries like Australia and Chile are also doing well as consumers get more adventurous.
We first noted the prospects for the Australian wineries back in 2013 with forecasts that affordable ‘fruit-forward’ wine would be a hit with Chinese customers (see WiC215). The volume and value of Australian wine imports grew by more than half last year, and China has overtaken the UK as Australia’s second largest market. All of this is happening before the fuller benefits of last year’s China-Australia Free Trade Agreement are felt. Under the terms of the deal, tariffs on Australian wine will be steadily reduced over the next three years.
Something similar happened when Chile signed its own free trade deal with the Chinese in 2005. Import tariffs were gradually phased out until they reached zero last January. Chile is now China’s fourth-largest supplier, selling 65 million bottles last year, an increase of 43% on 2014.
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