Changyu’s H1 profits dip by 5%

China’s oldest winery, Changyu Pioneers, suffered a 5.11% drop in net profit in the first half of the year, blaming its results intensified competition among low- and medium-range wines while its overseas wineries also posted revenue losses during the period, casting shadow over the country’s profitability this year.

From January to June, Changyu’s revenue grew by 2.21% to RMB 2.8 billion (US$410.2 million), while its net profit dropped by 5.11% to RMB 563.8 million (US$82.6 million). In its half year report, the company cited the profit drop as a result of rising production costs, challenges from e-commerce channels and heightened competition from home and abroad.

During the period, its lower-end wines, brandy and sales from Changyu-Castel, a joint venture between the Chinese winery and the French Castel family in Shandong province, saw different degrees of drops, while its medium to higher-end brands including ‘Noble Dragon’ brand, made from Cabernet Gernischt, recorded some growth, it says.

Overseas, its wineries in Chile, France and Australia did not manage to post any growth. Indomita, a Chilean winery Changyu purchased in 2017, and Château Mirefleurs, a Bordeaux Supérieur estate Changyu bought from Castel, and its latest purchase of Australian winery Kilikanoon Wines failed to generate any profit during the first period of the year.

Overall, Changyu’s wine business generated RMB 2.23 billion during the period, while its brandy business brought in RMB 550 million, the company says.

Another Chinese wine company, Zhong Pu, which owns three wineries in China’s northwestern Xinjiang province including Niya, also reported RMB 47.88 million loss in profits from January to June.