The outbreak of the New Crown epidemic has had a huge negative impact on the global economy, and the Chinese economy cannot survive alone. Data released by the National Bureau of Statistics of China on April 17 showed that the GDP of China fell 6.8% year-on-year in the first quarter, which was the first negative growth since the quarterly statistics in 1992. The rapid and unpredictable deterioration of the macroeconomic environment has caused inestimable impacts on various industries, and has even more impact on the alcohol consumption market.

In the first decade of the 21st century, the external economic environment was relatively stable, bringing about a golden decade for the development of the wine industry. Since then, it has maintained a relatively stable development trend, and the supply relationship between wine companies, wine merchants, and consumer groups has matured. The sudden outbreak has broken this relatively stable market structure. Public information shows that online liquor sales in January were about 3250000 pieces, in February it quickly dropped to about 750,000 pieces, and in March it was about 800,000 pieces. The annual performance of liquor in each price zone is expected to be 5%-15% Unequal negative effects.

The outbreak occurred around the Spring Festival in China. Although the distributors’ inventory was transferred to distributors and terminal outlets, the highest peak of such channels in the year is from the 24th of the twelfth lunar month to the seventh day of the first lunar month, and two weeks will account 80% of sales of the Spring Festival. Under the epidemic, such channels generated little sales, and it will take a long time after the epidemic to digest inventory. In addition, this year’s Spring Festival and even the first half of the year, ‘no going out, no meeting, and no dinner’ has become the social norm of the public. Social banquets based on customer care, business dealings, and year-end gratitude have almost disappeared; the original hot and unpredictable New Year’s Eve dinner was cancelled and canceled, many restaurants were closed, and the classmates and friends who went out for dinner almost disappeared… It is not an exaggeration to describe the entire alcohol consumption market as ‘scarred’.

‘Disaster will not change the business process, but will change the business pattern’-the domestic wine industry pattern is accelerating changes. Facing the sudden black swan in the industry, the leading companies obviously have more advantages in cash reserves, production and operation scheduling and sales channel control. If the consumption capacity of the liquor industry declines in the short term, high-end liquors can squeeze the share of other categories through price reduction or promotion, thus ensuring their own sales and overall business performance. Once the high-end price is cut, there will be a blow to dimensionality reduction, and the low-end leader who has ran out of scale advantage through competition will increase the price of people’s living standards, and mid-end products will be squeezed by both ends.

Based on the above, coupled with the current situation of squeezing growth and increased concentration in the industry, the impact of the epidemic is a growth problem for large wine companies, but a survival problem for small and medium-sized wine companies. It is inevitable that the post-epidemic era will reshape the wine industry.

——Dr. Yang Min, Researcher of WABA IR