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Under the epidemic, where is the way of the foreign wine industry?

Under the epidemic, where is the way of the foreign wine industry?

  • Categories:Industry News
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  • Time of issue:2021-08-12
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(Summary description)Recently, Barules, one of Shanghai's well-known Internet celebrity bars, announced through WeChat that it will officially close in early March. Kin Sang, a senior in the bar industry, also called on everyone to tide over the difficulties through the Internet. Reminiscent of the Beijing King of K Songs, which announced the closure of business and layoffs in early February, and the major nightclubs that have already stopped paying salaries, the impact of the epidemic on the whiskey or the entire foreign wine industry has clearly appeared in the terminal.

Under the epidemic, where is the way of the foreign wine industry?

(Summary description)Recently, Barules, one of Shanghai's well-known Internet celebrity bars, announced through WeChat that it will officially close in early March. Kin Sang, a senior in the bar industry, also called on everyone to tide over the difficulties through the Internet. Reminiscent of the Beijing King of K Songs, which announced the closure of business and layoffs in early February, and the major nightclubs that have already stopped paying salaries, the impact of the epidemic on the whiskey or the entire foreign wine industry has clearly appeared in the terminal.

  • Categories:Industry News
  • Author:
  • Origin:
  • Time of issue:2021-08-12
  • Views:0
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Recently, Barules, one of Shanghai's well-known Internet celebrity bars, announced through WeChat that it will officially close in early March. Kin Sang, a senior in the bar industry, also called on everyone to tide over the difficulties through the Internet. Reminiscent of the Beijing King of K Songs, which announced the closure of business and layoffs in early February, and the major nightclubs that have already stopped paying salaries, the impact of the epidemic on the whiskey or the entire foreign wine industry has clearly appeared in the terminal.

For practitioners in the foreign wine industry, during the Spring Festival, when the flow of passengers is already reduced, they have closed their doors to thank guests, and anti-virus measures have further exacerbated the industry’s plight. For the bar industry, which is almost entirely dependent on the turnover brought by daily passenger flow, especially the bars in first-tier cities, expensive rents and high labor costs can only barely maintain the one-month suspension of business during the Spring Festival.

 

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Many bars have to turn on the flash delivery mode in Moments, bring wine to their door at half price, and even start cocktail delivery services. But this is still a drop in the bucket. Once the business cannot be operated normally for two or three consecutive months, if there is no blood transfusion from the investor, this will undoubtedly be a devastating blow. According to industry sources, many bars across Asia are closed. If the virus continues to spread at the current rate, more bars are expected to close soon.

According to reports, Diageo told the British "Financial Times" that due to the sharp decline in passengers at major airports and the decline in consumption in major Asian markets, sales losses are expected to exceed £200 million. Major distributors in the UK and Asia also reported that the sales of bottled and barreled whiskey in China have also slowed down significantly. Pernod Ricard’s report in mid-February also reduced its recurring business profit growth forecast for fiscal year 2020 from the previous 5-7% to 2-4%. (Source: RobbReport, The Spirits Business)

 

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The Japanese whisky market in neighboring countries is also affected. Due to the spread of the coronavirus, most Japanese whiskey distilleries will close their tourist visit business. Starting from February 15th, several smaller whisky distilleries such as Suntory’s Yamazaki and Hakushu distilleries, Nikka’s Yoichi and Miyagikyo distilleries, Kirin’s Fuji Gotemba distilleries, and Shizuoka distilleries have stopped. Up the itinerary. All visits until at least mid-March have been cancelled, and a new start date has not yet been determined.

For the major foreign wine brand companies, it is not the closure of whiskey or cocktail bars that has a greater impact, but the vicious circle brought about by the closure of many large-scale night market ready-to-drink channels. Especially for the whiskey category, more than 60% of sales come from such channels. There is no passenger flow, night markets are closed, there is no consumption, dealers cannot make shipments, inventory is backlogged, and brand companies’ sales have plummeted. If the sales target cannot be met, most brands will inevitably reduce their investment in the market. The entire market will shrink further.

 

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Some people may say that there are also e-commerce companies that can make up for the lack of night market channels. But what you need to know is that for the foreign wine industry, especially spirits such as whisky and cognac, online sales account for no more than 10% of the volume. Especially for foreign wines, such as "enjoyment-not-essential" products, because most offline scenes have disappeared, and people's desire for enjoyment during the epidemic period is reduced, and the propensity to consume at home is correspondingly reduced. Online marketing is difficult to make up.

Recently, in the process of self-rescue, foreign wine brands have tried to cooperate with well-known nightclubs on Yunbundi live broadcast. The bleak conversion rate also indirectly proves the indispensable significance of offline scenes for foreign wine consumption. On the other hand, when the night market cannot be shipped, many distributors are eager to withdraw funds. They will also use online channels, including Tmall, JD.com, and even WeChat communities to ship goods. To a certain extent, grabs will also occur. In the case of the runway, e-commerce companies may face the dilemma of limited overall sales increase, but the competitive situation has doubled.

With the gradual improvement of the epidemic situation, major wine companies are also returning to work one after another. Although there is no accurate estimate of when traditional channels will return to normal, it does not mean that everyone can do nothing. In short, the author believes that at least the following aspects can be prepared:

 

Protect your employees

The health and safety of personnel is always the first, because they are the key to the recovery of companies and brands. Especially the big foreign wine brand companies, which are already big businesses, are more than capable of resisting risks compared to many small and medium-sized enterprises. Therefore, before the end of the epidemic, effective use of flexible resumption time, considerate employee support, and a developed online office system to conduct effective online training to ensure the health and safety of employees is a necessary condition for rapid development after the epidemic.

 

Stable distribution channels

Whether it is to large or small wholesalers or to many cooperative retail terminals, they should convey confidence in the fundamentals of the domestic market, commitment to continuous investment, and support to partners. At the same time, it is very important that if the dealer has sufficient inventory, it must not be overwhelmed. For example, in an open letter from the sales director of Suntory recently, we have seen this kind of responsibility. Maintaining the healthy circulation of channel inventory is the long-term survival of the brand. Of course, maintaining the stability of the distribution price system is also a top priority.

Adjust the brand plan

Under the premise of fully predicting the situation, some foreign wine companies have adjusted their sales targets and plans for 2020. The stagnation of consumption will inevitably affect the cash flow of each entity in the industry chain, and cutting investment has become an inevitable choice for many brands when output is greatly reduced. According to the author’s understanding, most domestic wine companies have suspended or postponed their offline activities throughout the first half of the year, and most brands have also focused on making efforts after the epidemic is over. It is foreseeable that in the second half of the year’s media releases, competition will increase. fierce. Canceling or postponing the originally planned offline activities and reducing the frequency of online advertising is not a problem, but how to use social media reasonably to accumulate power for brand communication online may also be one of the measures considered by some brands.

 

Looking for new opportunities

Recently, Rod Communication Group and Precision Market Research Center jointly released the latest "2020 China Luxury Products Report", which shows:

 

  • Remy Martin, Louis XIII, and Hennessy continued the trend of the previous year, ranking top five with Moutai and Wuliangye in brand awareness in mainland China. The more well-known brands that continuous investment brings, the faster they can recover from the trough.

  • The performance of third-tier and lower cities is impressive, with a total consumption of nearly 400,000 yuan in the past year, which is significantly higher than that of first- and second-tier cities. Tier 3 cities have strong purchasing power and are also opportunities and growth engines for the development of China's luxury goods market in the future.

  • Tmall leads the online consumption of luxury goods in mainland China, and about 60% of consumers said they have used the platform to purchase luxury goods. At the same time, the proportion of shopping on the brand's official website has also increased significantly, reaching 48% of users. Jingdong ranked third.

 

For many foreign wine brands positioning high-end and even luxury goods, how to quickly complete the layout before consumption resumes after the epidemic, in third-tier cities, on different e-commerce platforms and social media, target different consumer segments, and make rational use The influence of KOLs of opinion leaders in different industries has uncovered new opportunities, and it is believed that it will bring great variables to their respective final performance answers at the end of the year. For example, recently many whiskey brands have started to launch vibrato or online live broadcasts. When offline tasting activities are not available, it is a beneficial attempt to use online interaction for brand communication.

2020 is destined to be an extraordinary year. The ravages of the new coronavirus have had a far greater impact on many industries, especially the catering and beverage industry, than SARS in the past. But at the same time, various industries also have stronger resilience than 17 years ago, and a larger infrastructure environment. I believe that the economy should be able to achieve a rapid rebound, and the wine industry can also do the same.

In a pessimistic atmosphere, those with confidence have a better future. The epidemic will eventually pass, and Chunhui will surely spread all over China. At that time, let us have a good drink together and stay drunk.

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