Numerous Chinese investors are diversifying their activities by buying up Bordeaux vineyards and leaving the estates' management in French hands. It's a win-win situation, thanks to the strength of the châteaux "brands" and the huge markets that China presents for Bordeaux wines.
"For years, I’ve been thinking about the same question: what industries are going to develop quickly in China?" said Shen Dongjun, owner of the Chinese jewelry chain TESiRO. "My answer is always the same: the wine industry." At the beginning of 2011 he acquired Château Laulan-Ducos’s 22 hectares of vines.
“With the growth, increasing numbers of Chinese consumers are learning to drink French wine and are falling in love with it," added the jewelry magnate. "The wine market is one of China’s biggest opportunities." And Shen posed the question: "What wine lover doesn’t dream of owning his own château?”
Latest figures for sales of Bordeaux wine in 2012 confirm the importance of China. With imports of 538,000 hectoliters (10 percent of production) China has become the top market by volume for the region, well ahead of Germany, Belgium and the United Kingdom – each of which imports around 250,000 hectoliters a year.
Just 10 years ago, wine was rarely consumed in China.
Delighted by these new sales records, Georges Haushalter, president of the Conseil Interprofessionel des Vins de Bordeaux (CIVB), stresses that Chinese investors “arrive with plenty of ambition,” and are looking to “increase quality further in investing in this framework.”
This is very much the case at Château Monlot, seven hectares of grand-cru vines in Saint-Émilion, bought in 2011 by the actress Zhao Wei. They are managed by one of Bordeaux’s most celebrated enologists, Jean-Claude Berrouet, who has worked on 44 vintages for the legendary Château Pétrus.
“The goal is to lift the quality of the wine so as to lift it to the most prestigious level, to be a point of reference,” says Berrouet, revealing that investment in a new fermenting room and barrel storage has been undertaken “to give us the means to reach this goal.”
The Chinese have been carefully moving in on the Bordeaux wine scene since 2008, buying up properties below 5 million euros ($6.4 million). In 2011, the trend picked up with the buyout of a number of châteaux, which in some cases had been on the market for some time. Today, around 30 properties are owned by businessmen or finance houses from China.
Jacques Dupont, specialist wine writer for the weekly magazine Le Point, explains that “at first, their purchases were guided by the architecture of the buildings,” along with a desire to appropriate for themselves some of the culture and history of France. "But the goal being to make money, they’ve acquired vineyards capable of producing high volume."
For investors with a foot in the Chinese wine market, "owning a vineyard in Bordeaux brings with it credibility and prestige,” says Thomas Julien, the CIVB’s representative in China. “For others it’s an exercise in public relations, allowing them to host clients in a beautiful French heritage building." He notes that “Bordeaux is to wine what Paris is to luxury.”
Li Lijuan is a negotiator who worked on the 2012 buyout of Château Grand Mouëys by Zhang Jinsan, head of the NingXia group, China’s top producer of alcoholic beverages. She believes that such investors are also motivated by the search for a sound property investment: one of these Bordeaux châteaux costs only “as much as a large apartment in Hong Kong.”
She emphasizes that Bordeaux is “also of interest because of the luxury of the Atlantic coast with its casinos and wine tourism,” adding that at Grand Mouëys, the guest rooms are intended for Chinese luxury tourism.
Wine négociants perhaps have most to fear from these new arrivals. By producing their own wines, the Chinese owners plan to cut out the middle man and his margins by directly selling the whole of their harvests in China through their own distribution networks.
But according to Haushalter, himself a négociant, the “Bordeaux trade is used to this attitude.” He believes that the Chinese “will in time see the importance of having markets throughout the world and a diverse client base,” which the local négociants can supply.
Shen Dongjun acknowledges that he originally envisaged exporting the whole of Laulan-Ducos's 120,000 bottles to China, but is now planning to “develop other markets.”
Apart from two major companies, King Power, a distributor of luxury brands, and Cofco, a state-owned import-export business, the investors come from a range of backgrounds. They are often businessmen who are keen to diversify their interests through their enthusiastic entry into the world of wine, and at the same time make money.
France’s super-wealthy won’t be arguing against such a strategy. The Rothschilds and Dassault were first, but other newly wealthy CEOs such as Arnault, Pinault, Bouygues, Bolloré and numerous others have followed. Over the last 15 years, they have turned their diversification into vineyards, especially in Bordeaux, into enviably flourishing businesses.