Two wine leaders sales drop

Affected by policies such as the limited consumption of Sangong and the impact of imported wine, the sales of the two leading domestic wines Changyu and Great Wall fell sharply in the first half of this year. Changyu's operating income decreased by 15.71%, of which wine sales revenue fell 19.9%; China Food's China food operating revenue fell 10.6%, of which wine sales fell 34% year-on-year.

Changyu Net Profit Drops 20%

Changyu released the semi-annual report on the evening of August 27. During the reporting period, the company realized operating income of 2.539 billion yuan, a year-on-year decrease of 15.71%; net profit attributable to shareholders of listed companies was 740 million yuan, a year-on-year decrease of 19.60%.

Zhang Yu said that due to the slowdown in economic growth, changes in relevant national policies, and the cumulative effect of continuous influx of foreign wines for many years before, the competition in the domestic wine industry is fierce, bringing great pressure on the company's product sales. In the face of many external unfavorable factors, the company vigorously promoted management innovation, timely adjusted its marketing strategy and product structure, improved its marketing system, and tried to avoid excessive fluctuations in its operating performance.

As for the decline in operating income in the first half of the year, Chang Yu explained that sales of high-end products such as wineries were down year-on-year. Specifically, in the first half of the year, Changyu wine sales revenue was 19,480,800,000 yuan, down 19.9% ​​year-on-year; brandy sales revenue was 4,900.4 million yuan, up 0.98% year-on-year; champagne sales revenue was 2016 million yuan, up 4.64% year-on-year.

In the first half of the year, Changyu's gross profit rate dropped by 5.86 percentage points to 70.09%. The gross profit margins of the rest of the wines except brandy all declined, and the gross profit rate of wine dropped by 6.23 percentage points year-on-year to 72.78%.

Zhang Yu said that in the first half of the year, it was also further improving the marketing system, adjusting the product structure in a timely manner, and working hard to promote the overall development of the company’s wines. In the face of changes in the market environment, the company is trying to adjust and improve the existing traditional channels such as hotels and supermarkets, and to develop new market growth points, vigorously develop e-commerce, group purchase sales channels, and Changyu Pioneer Winery Alliance stores. The marketing system made the company's sales network more reasonable; in response to changes in the market, the company appropriately reduced the number of products, increased marketing efforts for ordinary dry red wine, brandy, and imported wine, and achieved good results; Zhuang product preparation before listing, and strive to market its products during the year and the formation of market size as soon as possible.

Great Wall Sales Drop 34%

China Food also announced its semi-annual report on August 27. In the first half of the year, China’s food revenue decreased by 10.6% to 13.92 billion yuan, net profit attributable to owners of parent companies was HK$304 million, while net profit attributable to owners of parent companies was HK$474 million in the same period last year. The overall gross profit margin decreased from 22.2% in the same period of last year to 20.8%, which was mainly due to the alcoholic beverages division and kitchen food division.

China Foods stated that the slowdown in the economic development rate has a direct impact on the overall spending power. All of the company's businesses are affected, and the sales revenue of each major business has a negative growth at different levels. The company's current main business includes beverages, wine, kitchen foods and snack foods.

In the alcohol business, due to the strict control of the policies of the Sangong Consumer and the Limited Liquor, the demand for high-end alcoholic beverages has fallen as well as the competition of imported wine companies. These industry factors have brought severe challenges to the alcoholic beverage business and the sales revenue has been significant. Falling, poor sales structure led to a drop in gross profit margin, and performance turned from profit to loss.

According to China Foods, Great Wall Wines ranks first in the industry in sales and market share for many years. As of June 2013, the total amount of wine consumed in China declined compared with the same period of last year, which was the first decline in five years. Affected by this, China Foods achieved sales revenue of RMB 1.131 billion in the first half of the year, a sharp drop of 42.2% year-on-year; wine sales decreased by 34% year-on-year, and gross profit margin decreased by 9.6% year-on-year.

China Foods also expects that, with the bursting of high-end wine bubbles and the return of rational consumption, wines will move from government commercial occasions such as previous banquets to the middle and low-end mass consumer markets.