China’s Grace Vineyard interim results hold firm

Grace Vineyard, China’s leading boutique family winery, has announced its annual interim results which saw revenue for the first half year of 2020 hit RMB19.6 million and, despite a drop in sales due to the impact of COVID-19, the performance of Q2 this year was better than Q1.

In the statement, it reported the half year revenue for 2020 was significantly lower than the corresponding period in 2019.

However, the decrease in sales in Q1 2020 compared to the same period last year fell from approximately 46.0% in the first quarter to approximately 23.8% in the second quarter.

In the second quarter of 2020, the company recorded a profit after tax of approximately RMB0.5 million, compared to a loss after tax of approximately RMB2.4 million for the previous quarter.

Judy Chan, chairlady of the company, mentioned the top three priorities for the remaining financial year are namely to maintain prudent operation and focus on liquidity, achieve their goals in the new sales strategy in Shanxi, and to drive demand for wines through micro-segmentation in various distribution channels.

She also gave an update on the company’s latest sales strategies, which included the company changing its distribution in Shanxi this year. The first half of 2020 was spent looking for appropriate partners and it has appointed 11 new distributors so far, bringing the total to 12 and covering the main cities in the province.

Moving forward to the second half of 2020, the team will work closely with each distributor to develop and implement sales and marketing support policies which address each specific partner’s need. By introducing the ‘one-city-one-policy’, it is hoped to help increase the brand’s market presence and penetration.

Last year, the company initiated a spirit project and purchased distillery facilities in Fujian, located on the southeastern coast of China. The distillery facility construction will commence later this year. The target completion date however will be delayed half a year to the fourth quarter of 2021.

In order to speed up the progress of the project, the management has identified an existing distillery owned and operated by an independent third party which can be used for early operations during the construction of the distillery. Chan hopes to start the production of gin immediately and conduct product development on whisky in the meantime.

She concluded that the management remained optimistic to the market as well as their existing plans, especially since both Shanxi and Fujian have been affected relatively lightly by the pandemic so far, and the market wine consumption has generally resumed based on their sales figures.