Launches New Package Products to Tap into The Young Consumer Market
Dynasty Fine Wines Group Limited (Dynasty or the Group) (HKG: 828), a premier grape winemaker in China, today announced its unaudited interim results for the six months ended 30 June 2022.
During the period, the resurgence of COVID cases in various cities in China caused the imposing of control and lockdown measures in consuming places and also led to adverse impact on consumer sentiment. As a result, in the first half of 2022, the Group’s revenue decreased by 44% to HK$101 million, compared to the same period last year, whereas profit attributable to owners of the Company dropped by 45% to HK$10.7 million. However, gross profit margin increased from 38% in the first half of 2021 to 40% during the period.
With consumers’ growing interest in white wine products of the Group, especially in coastal regions of China, revenue of white wine products transcended red wines products for the first time in the first half of 2022, as the Group’s major revenue contributor, accounted for approximately 52% (2021 1H: 41%) of the Group’s revenue for the period. Red wines revenue accounted for 45% (2021 1H: 58%). During the period, the gross margin of white wine products and red wine products were 44% and 35% respectively (2021 1H: 35% and 39% respectively).
The Group produces a wide range of more than 100 wine products under the “Dynasty” brand. It has been actively pursuing innovation, embracing the “5+4+N” product strategy. The Group’s 5 key series of products comprise the air dry series, seven-year reserve series, merlot series, classic series and best-selling series, which cover fully the price range of mainstream markets, whereas the 4 advantageous product categories include dry red wines, dry white wines, brandy and sparkling wines, which enlarge vertical market shares for the Group. Furthermore, the Group boasts the development of “N” kinds of customized products to meet the diversified needs of Chinese consumers.
During the period, the Group launched a new round of upgraded products, the innovative 373ml and 180ml Dynasty dry red and semi-dry white series. The new sizes coming with screw caps offer greater convenience to enjoy and young and chic styles that target the young consumer market. The 180ml wine comes in boxes of six, giving young people another choice of drinks than beers in gatherings. As for the 373ml size, with online-to-offline (O2O) platform support, consumers can scan the product QR code and get rewards. Moreover, the Group has created a gift box during the period for the collection of “Pleasant Color” wines which targets the young consumer market as well. The gift option is ideal for gatherings with family and friends and festive celebrations. New product launch and product upgrade are not only promoting interaction between consumers and the Group’s brand, but also ultimately enable Dynasty’s products to reach wider consumer groups.
In addition, the Group also sold chateau wines imported from France and other foreign branded wines in China through the Group’s existing distribution network. In that way, the Group introduced classic “old world” and “new world” varietals to cater for the consumer group preferring the taste of foreign premium wines.
During the year, the Group’s e-commerce team started to operate online stores on such traditional e-commerce platforms as JD.com, Tmall and Pinduoduo. Moreover, innovations were achieved across its brands, product categories, business systems, operation procedures and models via new retail platforms including Weibo, RED (Xiaohongshu app), Kuai (Kuaishou app) and TikTok (Douyin app), which replaced the cooperation with distributors. The e-commerce team has also actively cultivated e-commerce live broadcasting talents to further expand the Group’s sales channels so as to build up a new customer base.
The Group held its tasting and business events this February and June, during which the Group actively promoted its latest product mix that covered all product lines, and received enthusiastic market response. Close to the end of the first half of the year, the pandemic has subsided in most regions of China, and the business and sales of the Group has a gradual recovery to normal. Against this backdrop, the Group will continue its reform in sales and marketing. Following the relaxation of COVID control and lockdown measures, the Group will forge ahead the mass-scale marketing campaign showcasing 20,000 shops, hosting 1,000 wine tasting events and organising 100 plant visits, so as to keep developing and enhancing its point-of-sale network.
Mr. Wan Shoupeng, Chairman of Dynasty, concluded, “Looking ahead to the second half of 2022, Dynasty will further strengthen presence in Ningxia and Xinjiang to secure the supply of quality grapes and grape juice, and plan for the development of local production bases of grape juice in these regions in the long term. In addition, following the gradual containment of the COVID situation and relaxation of control and lockdown measures at the end of the second quarter of 2022, as well as the policy support for the recovery of economy, the Board currently remains cautiously optimistic on the business in the second half of 2022. The Group will continue to be well prepared to tackle the uncertainties associated with the pandemic, proactively develop the market, enhance product quality and boost sales volume.”