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Chinese liquor store 1919 plans domestic retail push

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Liquor chain 1919 is set to open 5000 stores across China over the next three years, providing a new stage of growth for foreign wines, as traditional alcohol tastes change in China.

China’s 1919 said it plans to immediately double store numbers to 2000 by the end of the year, and hit its target of 6000 locations by 2019. This means the alcohol distributor needs to open on average four new stores each day for the next three years.

The 1919 company, founded by Bob Yang, is also forecasting annual sales of 150 billion yuan ($30 billion), which would make it among the world’s largest liquor retailers.

“We expect to be the biggest foreign wine retailer in China this year, overtaking JD.com,” founder and chairman of 1919, Bob Yang told the Australian Financial Review. “The next ten years will be a golden age for imported wine in China.

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While Baijiu remains the nation’s drink of choice – and 1919’s too, due to the white spirit’s role in traditional Chinese celebrations, foreign wine is the next largest category on sale, making up nearly 80 per cent of the wine in stock.

At 1919, Australian wines make up around a quarter of total liquor offering, behind French labels. However, the market share for French wine is flat at about 44%, while Australia has seen its share grow from about 18% in 2014 to 25% last year.

As 1919 books hefty investment – Yang has raised $300 million so far to fund his retail extravaganza, Melbourne-based Treasury Wine Estates, owner of Penfolds and Wolf Blass and the largest foreign wine importer in China, has recently tapped 1919 to be a main distributor.

“The bottle shop is an exciting emerging channel for the wine market in China,” Robert Foye, head of Asia, Europe, the Middle East and Latin America at TWE told AFR.

According to Foye, TWE plans to use the chain’s aggressive expansion to promote its little-known Californian range in China. It only recently purchased the product from beverage giant Diageo in January last year.

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China’s total alcoholic beverage imports including wines, beers and spirits registered strong growth in both volume and value terms in the first 10 months of 2016, according to the latest figures released by China Association for Imports and Export of Wine & Spirits.

From January to October, the country imported over 1.8 billion litres of alcoholic beverages, worth about US$3.5 billion, an increase of 35.07% in volume and 13.89% increase in value over the same period last year.

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