Hong Kong A&A International’s Purchase Of Controlling Stake In One Of Bordeaux’s Oldest Vineyards Reflects Wine’s Growing Importance, Popularity In Greater China Region
Today, details were released of Hong Kong investment firm A&A International’s purchase of French winery Chateau Richelieu, a major development in the global wine trade. While the growing interest in wine in the Chinese market is not necessarily new — sales have been rising for several years now — it seems that Chinese buyers and investors are taking advantage of the global economic downturn and accompanying decline in purchases by western and Japanese buyers to get a hold of rare wines (as we saw in recent wine auctions in Hong Kong, where Chinese buyers snapped up every last bottle) as well as make unique deals with vineyards and wine franchises (as we saw with the recent Chateau Lafite joint venture in Shandong Province).
So what will the increased interest in wine by Chinese consumers mean for global wine markets? The assumption is, at the moment, not much — the idea of wine “speculators,” who plan to hang on to their bottles for years, is likely absent in the Chinese market (yet may exist in a limited form in Hong Kong), and as many analysts have pointed out, one thing that Chinese buyers of fine wines do differently than many of their western counterparts is actually drink the wines they purchase.
But that doesn’t mean that every Chinese wine buyer at a Sotheby’s auction intends to drink all of the bottles for which he or she plunks down thousands of dollars. I think the importance for global wine markets lies not so much in a possible knock-down effect on the price of wine, but rather the idea of wine makers shifting their focus (and marketing) to appeal to the different sensibilities of the Chinese wine market. While most wine drinkers share a love for wine which drives their core interest, there are different factors, cultural factors, in the Chinese market that differ greatly from the west. And with Chinese investors becoming increasingly interested in creating joint ventures with foreign wine makers (or purchasing them outright), it looks like the shift in priorities for (mainly European) wineries may pick up steam.
The wine blog Decanter writes on A&A International’s purchase of Chateau Richelieu:
‘The Chinese have a great love for Bordeaux grand crus, and of course the current crisis is offering interesting opportunities to buy into this iconic wine region,’ Patrice Klug, president of MK Finance – which organised the sale – told decanter.com.
Klug confirmed the new shareholders plan to increase the property’s production by buying or renting local vineyards over the next few years.
The Dutch co-owner Arjen Pen and his team will remain in place in Bordeaux, while A&A International will oversee sales and distribution to a range of high-end restaurants, hotels and wine bars across China.
The purchase price was not disclosed, but a Bordeaux vineyard expert estimated that a Fronsac estate of this quality should fetch around €200,000 (£171,618) per hectare, which translates to around €3m.
According to Klug, sales of Bordeaux wine in China increased 36% last year, while consumption of all wine rose 15%.
Although at the moment, percentage-wise, China’s population is both uneducated about and broadly uninterested in “grape wine” as it’s called, the growing number of wine aficionados in the world’s most populous nation is a clear indication that wine producers simply cannot ignore the importance of the Chinese market. However, with news of trade delegations from Australia and the U.S. organizing events geared towards securing distribution deals in Hong Kong and the mainland becoming increasingly common, we can see that wineries are already well aware of how critical the Chinese market will be for their brands in coming years.