Revenue Returns to Growth in The Second Half While Actively Reducing Operating Costs
Plans to Build Winery in Ningxia with Annual Production Capacity of 5,000 Tonnes
Dynasty Fine Wines Group Limited (Dynasty or the Group) (HKG: 828), a premier grape winemaker in China, today announced its audited annual results for the year ended 31 December 2022.
In 2022, the Group’s overall performance was affected by the resurgence of COVID in China. Despite this, the Group made active efforts to lower operating costs and expenditure and its revenue recorded a growth again in the second half of 2022 due to the containment of the pandemic in the country.
During 2022, the Group’s revenue was HK$241.4 million and the profit attributable to the owners of the Company was HK$16.3 million. The overall gross profit margin remained stable at 38%, mainly as a result of the Group’s adjustment of product sales mix to more medium-end mass market wines products.
With consumers’ growing interest in white wine products of the Group, revenue of white wine products transcended red wines products for the first time in 2022, as the Group’s major revenue contributor, accounting for approximately 51% (2021: 40%) of the Group’s revenue. White wine products have higher gross profit margin than red wine products in 2022, which were 44% and 32% respectively.
The Group produced a wide range of more than 100 wine products under the “Dynasty” brand in the distribution sector, and has been actively pursuing innovation to meet the diverse needs of different Chinese consumer groups. Embracing the “5+4+N” product strategy (5 key series of products, +4 advantageous product categories, +”N” kinds of customized products), product packaging upgrade also agreed to the trend of supporting domestic products.
During the year, the Group launched new medium to high-end products, i.e. Dynasty Chinese Zodiac Commemorative Dry Red Wine for the Ren Yin Year of Tiger, integrating the high quality with the Chinese zodiac culture and the leading rise of Chinese-style fashionable products, and “Starlight” and “Years” series targeting at regional customers.
Meanwhile, the Group launched new products which looked young and chic, and were more convenient to enjoy, aiming to strengthening the deployment of products for young consumers.
A grape wine series of entry-level prices, Pleasant Color, targeting at young consumers has been well received since its debut last year. The Group’s marketing team made it as a gift option and created a gift box for the collection. Leveraging the marketing over a combination of multiple new media platforms including RED, TikTok etc., the series has ever become a hot choice on the internet.
The Group has also launched the 180ml and 373ml Dynasty series with an innovative design of screw caps to make them tap into the young consumer market. The 180ml wine series was giving the younger generations another choice of drinks in gatherings. The 373ml size, through the promotion method that consumers can get rewards after scanning the QR code, promoted interaction between consumers and the brand.
On the other hand, the Group sold chateau wine imported from France and other foreign branded wines in the PRC wine market through the Group’s existing distribution network to introduce some classic “old world” and “new world” varietals to cater for a market niche preferring the taste of foreign premium wines.
As for the online sales, the Group strategically plans and continues putting resources for improvement of the online sales channels, which are expected to increase brand promotion thereby enhance the overall business potential of the Group.
During 2022, the e-commerce team of the Group started insourcing to operate online stores on the traditional e-commerce platforms, such as JD.com, Tmall and Pinduoduo for product sales. Besides, the Group as well as comprehensive innovation on its brand, product categories, and business systems, procedures and models via new retail platforms, include Weibo, RED, and TikTok other than cooperation with distributors. Such efforts facilitated the Group’s autonomous brand communications and enhance effective market penetration of the Group’s products targeted at young consumers. Meanwhile, the e-commerce team also actively cultivate e-commerce live broadcasting talents to further expand its sales channels so as to build up a new customer base.
During 2022, the Group continued in implementing a sales and marketing reform by holding its tasting and business events in February, June and November. And the Group took part in the 105th China Food & Drinks Fair (Food & Drinks Fair) held in Chengdu in November 2022, during which the Group actively promoted its latest product mix that covered all product lines. These events received enthusiastic response from distributors.
The Group is committed to maintaining high standard of research and technology in October 2021, the Group set the post-doctoral work station in the National-level Technology Centre for researching the selection of distinctive muscat yeast in order to brew more mellow and delicious wines which further promote the Group’s research and development of new products as well as new winemaking techniques. The centre has also set up a winemaking and wine tasting studio which has carried out rounds of wine introduction and tasting activities.
With its production department continuing to upgrade production technologies and introduce suitable equipment, the Group is able to maintain production at a relatively high level. At the end of December 2022, the Group’s annual production capacity maintained at 50,000 tonnes. Such capacity is sufficient for the Group to promptly response to the market demand and provide a platform for sustainable earnings growth.
The Group has more than 10 major grape juice suppliers with whom the Group has enjoyed long-term relationships, mainly located in Tianjin, Hebei, Ningxia and Xinjiang, ensuring stable supplies of quality grapes and grape juices.
The Group will further strengthen presence in Ningxia and Xinjiang to secure the supply of quality grapes and grape juice, and plan for the development of a winery nearby Eastern foot of Helan Mountain in Ningxia, integrating pressing, fermentation, processing, testing and research and development as a whole, with an annual production and processing capacity of 5,000 tonnes. The winery would become a new long-term and stable economic growth point of the Group and help the regional presence and layout of Dynasty wines, as well as in line with the overall planning and industry planning for the development of China’s wine industry.
Mr. Wan Shoupeng, Chairman of Dynasty, concluded, “Looking ahead to 2023, supported by national policies that encourage consumption, relevant activities in China will gradually return to normal. As such, the Group believes its business and sales will recover relatively quickly. Dynasty will focus on product quality and proactive market expansion by pursuing innovations for its wine series. We will continue to build Dynasty into a brand representative of Chinese wine with the aim of bringing Dynasty’s superior wines to more consumers in the PRC.
About Dynasty Fine Wines Group Limited
Dynasty Fine Wines Group Limited was listed on the Main Board of The Stock Exchange of Hong Kong Limited with the HKG 0828 on 26 January 2005. Founded in 1980, Dynasty is the premier grape winemaker in China. It is principally engaged in the production and sale of grape wine products under its reputable “Dynasty” brand. Dynasty is the first Sino-foreign joint-venture wine company in China with Tianjin Food Group Limited and the French grape wine giant, Remy Cointreau, as its major shareholders. The Group produces and sells more than 100 grape wine product series, and introduces imported wine products, providing high-quality and value-for-money grape wines to the full range of consumer groups in China.