Growing Taste for Wine Drives Chinese Investors to Bordeaux

on February 19 2014 | in Trends Wine & Spirits | by | with No Comments

China's affluent, Bordeaux, Chinese investors, luxury wines, wine industry, China's wine consumption

A growing taste for wine among China’s affluent is driving the country’s investors west to France’s famed Bordeaux region.

Chinese investors now own about 70 of the area’s 8,000 chateaus, and their influence in Bordeaux has grown considerably over the past few years. According to Li Lijuan, who is in charge of Bordeaux-based real estate broker Maxwell-Storrie-Baynes’s dedicated China desk, the investors have made over 20 transactions over the past year.

The entrepreneurs value high quality and are quickly learning the tools of the trade.

“Our Chinese clients are devoted to making good-quality wines. For example, after purchasing the chateaus, they also invested heavily in improving the quality through the use of oak fermentation barrels, investment in storehouses and by renovating the cellars, which are so important for improving the quality of the wine,” Li told China Daily.

But it’s not just a matter of taste and refinement. Wine is big business in China, and the investors are catering to an increasing demand for luxury wines. A report from the Economic and Research Department of Le Conseil Interprofessionnel du Vin de Bordeaux stated that the region’s wine exports to China totaled 338 million euros in 2012.

According to wine industry analyst Dong Shuguo, China’s wine consumption totaled about 50 billion yuan ($8.3 billion) in 2012.

A report by the Fortune Character Institute stated that wine consumption per capita grew significantly over the past decade, increasing from only 0.25 liters per annum in 2002 to 1.31 in 2012. Dong says that trend will only continue.

“Using figures from the International Organization of Vine and Wine, it’s estimated that China’s wine consumption will double by 2016, by which time the country will be the world’s second-largest wine market,” Dong said.

But China’s numbers still lag behind France’s, and, according to Beijing-based wine critic and consultant Lu Jiang, the industry has been dealt a hard blow from the country’s current austerity push. Wine is viewed as a status symbol and luxury item in China, and wines for gifts and banquets account for 70 percent of sales nationwide. Unsurprisingly, the new government policies greatly reduced sales.

“Some large vendors weathered at least a 30 percent decrease in their sales volumes in 2013, and a number of small and medium-sized vendors went out of business,” Lu said.

But Lu also said that “the worst times have gone” for China’s wine industry, and that he anticipates the market to grow and develop “in accordance with people’s growing interest and greater knowledge.”

Though some in France, concerned with losing their cultural heritage, are cautious of Chinese investors, Bernard Ducourt, former general manager of Bordeaux-based wine company Vignobles Ducourt, sees a great potential to open the region’s wines to new markets.

“Foreign investment in wine properties in Bordeaux is actually contributing to our original heritage by extending our wine culture and visibility,” Ducourt said.

photo credit: hotel-bordeaux-raba

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