China’s Great Wall cuts back on wines

Chinese wine producer Great Wall is set to cut up to 40% of its range to focus on the best-selling labels, its owner COFCO group has announced.

Great Wall plans to cut 407 of its 1,061 product lines – known as SKUs (stock keeping units) – COFCO said.

Rapid growth for imported wines in China in recent years has put pressure on domestic producers, some of which have struggled to maintain market share in the middle-to-high price categories.

Great Wall wine sales dropped by 9% in 2016 versus the previous year, according to China Food, then-owner of the Great Wall brand name and listed company in Hong Kong stock market.

The report also said that COFCO’s imported wine sector expanded by 147% in value during the same period, to hit 400 million RMB (45.5m GBP).

Changyu, China’s biggest wine producing company, also recently announced a ‘rebranding’ of its Cabernet Gernischt range, cutting back on its entry level wines so as to ‘consolidate the brand’s middle range’, said Sun Jian, deputy general manager of Changyu.

More about the Great Wall plan

The cut-backs are expected to affect all six of Great Wall’s winemaking estates: Chateau Sungod in Hebei, Chateau Yunmo in Ningxia, Great Wall Terroir in Shandong, as well as Great Wall’s wine producing plants in Shacheng (Hebei), Changli (Hebei) and Penglai (Shandong).

Cuts will mainly be targeted at lower-end wine ranges that fail to yield 500,000 RMB sales per year.

Private label wines made at Chateau Sungod, Yunmo and Great Wall Terroir will also be cut, said the group.

A new era for Chinese wine consumers

After reporting a continuous loss for two-and-half years since 2015, China Food Ltd announced last month it was selling its rights to the Great Wall brand name back to the group’s mother company, China’s state-controlled COFCO, as part of the group’s ‘structural reform’.

COFCO appointed Li Shiyi, head of the group’s imported wine sector, as the general manager of Great Wall earlier this year.

‘Chinese wine consumers have entered a new era,’ said Li Shiyi during a trade forum at ProWine China 2017 earlier this month.

‘They are seeking for higher quality, and they prefer more diverse, personalised choices, rather than following big brands. We need to change fast to capitalise on this trend.’

Currently all of COFCO’s wine and spirits affiliates are managed under the COFCO Wines & Spirits Company Ltd, one of the 18 ‘specialist’ sectors under the newly restructured COFCO group.

(Editing by Chris Mercer)