Hong Kong - Chinese state-owned firms, private corporations
and wealthy individuals are buying European vineyards as they look to
capitalise on a growing domestic thirst for foreign wine.
Demand for French, Italian and Spanish wines has boomed in
the world's second-largest economy over the last few years, bolstered by the
growth of China's super rich and burgeoning middle class, who are knocking back
the vino and the vin in record quantities.
David Guillon of IFL, a Hong Kong-based firm that sells
French vineyards, castles and luxury properties, said IFL completed six
multi-million euro transactions of vineyards in France's Bordeaux region with
Chinese investors in 2011, including state-owned grain trading giant COFCO. He
expects this number could double in the coming year.
IFL is currently in close negotiations with two major
state-owned companies, multiple private firms as well as Chinese celebrities
and football players.
"The demand is getting very huge and it has been a very
rapid evolution," said Guillon, adding that 80% of IFL's buyers in Asia
come from Hong Kong and China.
“For the state-owned companies, these firms can be
conglomerates which have nothing to do with the wine industry, hold a large
amount of cash and want steady returns,” he said.
While global wine prices have softened from skyrocketing
levels set in the last two years, private auction house Christie's sold all
lots at its February wine sale in Hong Kong, fetching results that were more
than triple pre-sale estimates.
In a testament to the strength of Chinese drinkers, the
country usurped the United Kingdom as the world's fifth-largest wine-consuming
nation at the end of 2011 and is forecast to grow to nearly 250 million cases
by 2016, according to International Wine & Spirit Research.
Cash-rich Chinese investors are keen to profit from the
country's growing love of wine - imports of Bordeaux wines and consumption in
the middle kingdom soared 110% in 2011 - by transforming chateaux into luxury
resorts complete with Chinese restaurants, golf courses and French gardens.
French vineyards can range widely in price, Guillon said,
pricing the 400-500 chateaux available for sale between €2-500m.
Chinese investors have tended to buy "smaller
ticket" vineyards in the range of €2-10m, as opposed to institutional
European and private investors who buy properties worth over €100m, he said.
But he expects Chinese buyers to rapidly move into a higher price range of
€10-30m in the coming year.
COFCO bought the 21-hectare Chateau de Viaud for €10m, while
Chinese jeweller Tesiro, Longhai International Trading and HK A+A International
Holding all bought vineyards priced between €2-6m last year.
Chinese better positioned
Wine industry analysts say Chinese buyers are better
positioned to tap their own connections in building a lucrative sales
distribution within China, a crucial advantage that foreign wine producers are
not as privy to.
"Ignoring for a second the fact that owning a Bordeaux
chateau is prestigious for just about anyone means you can set any price and by
extension, perceived value for the wine in question," said Aubrey
Buckingham, marketing manager at Hewitson, one of Australia's main wineries
based in Adelaide.
Some investors opt for foreign distributors such as retired
NBA basketball star Yao Ming, who started his own Napa Valley-based Yao Family
Wines and distributes his own cabernet sauvignon to China through Pernod
Ricard.
As well as Chinese sports stars, film and pop icons are also
buying up vineyards with popular mainland actress Zhao Wei buying a €4m
Bordeaux chateau at the end of 2011, according to local media.
French residents welcome Chinese and Asian investors buying
up acres of traditional vineyards and palaces, say industry experts, as the new
money helps to improve the vineyard and wine-making facilities and results in
better quality wine.
Charles Curtis, Christie's head of wine in Asia, also sees
the trend moving forward.
"Christie's Asian clients are progressing rapidly in
their love and connoisseurship of wine. As they do so, it is entirely natural
that they would want to capture a piece of the dream. Most people who visit
wine country want to stay."
Curtis added that even if the wine production itself did not
yield a large return on investment, the attendant investments in real estate
could be very remunerative.