China market competence intensifies, in the first half of 2006 Dynasty profit decreases 30%.
 
The overall profit of China wine industry is decreasing, Dynasty can not be well out of it. Dynasty gives out its result, net result is 82.30million Hong Kong Dollar, decreasing 30% comparing with 117 million Hong Kong Dollar of last year.
 
As wine popularizing in domestic market, wine market is growing rapidly, but more and more wine companies crowds into this industry, which peels the profit. In this situation, sales volume of Dynasty rises from512 million HKD to 576 million HKD, but net profit decreases by 29.6%. It is predicated that in first half of 2006 overall profit of wine industry would rise 12%, but the growing speed will drop 21%.

At the same time the deficit of wine companies increases rapidly, the grand deficit value of first half reaches 111 million RMB, increasing 76.62% over the same time of last year.
 
In recent two years wine market has been growing rapidly, becoming the best field in alcoholic drinks market. Spirits giants including Moutai and Wuliangye also throw themselves into grape wine field. At the same time tariff duties of overseas wine drops 10%, which attracts many international merchants into China market. 
 
A director of a large wine company said, "Two years ago top three wine producer (Changyu, Great wall and Dynasty) account for 45% of total market share, as competition intensifies, wine giants invest more on AD, besides that, grape price is rising, prime cost rises more than 30% over the last year."
 
As competition intensifies Dynasty plans to reduce cost by purchasing grape supplier. In April Dynasty invested 12 million RMB to buy stock of Ningxia Tiangong Yuma winery. After negotiation of stock Yuma becomes a joint operation winery of Dynasty. This action ensures the supply of grape juice, in the meanwhile decreasing the price risk of purchasing grape.
 
The biggest problem of Dynasty is sluggish in market promotion. The influence of Dynasty is in east China, but now more and more overseas brands crowd into this region. It is very difficult for Dynasty to keep the number one brand in Shanghai.
   
Sales volume of Changyu grows 21%, Greatwall increases 13%; sales value of Changyu increases 24%, Greatwall goes up 15%, Dynasty rises 6%.

Source:佚名