Online Wine Seller Jiuxian Raises Glass to Big Board Listing
(Beijing) — Jiuxian.com, one of China’s oldest and largest online wine sellers, said it has decided to delist from China’s over-the-counter-style (OTC) New Third Board, as local media cited a company official as saying the move was in preparation for a formal listing on one of China’s main boards.
Jiuxian continued to post strong growth, even as China’s broader wine industry slowed sharply after a period of rapid expansion. Despite the broader slowdown, online wine sales continue to make strong gains as they steal a market share from traditional retailers, mirroring a larger trend among e-commerce companies.
Jiuxian said its directors on May 26 approved a measure to de-list from the National Equities Exchange and Quotations (NEEQ) board, often called the New Third Board, according to a filing to the NEEQ shortly after the meeting. It did not provide any explanation for the move, and a company spokesman did not return an email seeking comment.
But Chinese news portal Sina.com cited a company official saying Jiuxian’s decision was part of a “sprint” towards a listing on one of China’s main boards where A-shares are traded. The report pointed out a growing number of New Third Board companies are making similar delistings, amid discontent over lack of liquidity due to rules that only allow wealthy Chinese to invest in the market.
Jiuxian’s delisting would also come as the company carves out a place in an online market for wine that continues to enjoy strong growth. The company reported its revenue grew 37% in the first half of last year to 1.2 billion yuan ($176 million), even as it reported a net loss of 72 million yuan, according to its most recently available public filing. But the company spokesman told Sina that Jiuxian finally turned profitable in the first quarter of this year.
After seeing explosive growth in the first decade of 21st century, wine sales in China began to taper off over the past five years, according to consumer data tracking firm Euromonitor. Total wine sales actually dropped in 2014 from the previous year, but have returned to a growth track since then, rising a modest 5% to 4.58 billion liters in 2016.
But online sellers have been taking more share of the market from traditional stores, allowing names like Jiuxian to grow much faster than the market rate. Last year online sellers accounted for nearly a fifth of the wine retail market in China, representing huge gains from just five years earlier when they accounted for less than 2%, according to Euromonitor.
Contact reporter Yang Ge (firstname.lastname@example.org)
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