Chinese Winery Changyu Hunting For More Foreign Purchases

China’s Yantai Changyu Pioneer Wine (000869.SZ) is looking to expand its network of overseas wineries and drive up imports into its home market over the next five years after investing in a Spanish Rioja producer in 2015, a senior executive said.

Changyu is in talks to buy mid-sized wine producers in Australia and Chile and is also looking to build on acquisitions in France, where it owns a cognac vineyard and a Bordeaux-based winery, general manager Sun Jian said.

The company, which makes over 90 percent of its money in China, wants to push overseas sales of its Chinese and international brands to 30 percent by 2010, according to Jian.

At the sale time, China’s biggest wine group aims to establish its foreign-produced brands at home, and hopes those imports will make up another 30 percent of revenue, up from 2 percent to 3 percent now.

Changyu’s 35 million euro ($40 million) purchase of a 75 percent stake in Spain’s Marques del Atrio winery in the Rioja area is an example of how it wants to operate.

“Our aim is for Marques de Atrio to be the number one Spanish wine in the Chinese market, the wine of reference,” Jian said through an interpreter during an interview in Madrid.

The firm is launching Noble Dragon, its wine made in China from Cabernet Gernischt and Cabernet Sauvignon grapes, in Spain now that it has a base there.

“We’re targeting the Chinese community, and especially through the distribution networks of restaurants and hotels, but also local consumers who are interested in trying new wines,” Jian said.

China is a fast-growing market for wine, with consumption per capita doubling between 1995 and 2010 to 1.2 liters.

That’s still 40 times lower than in France, however, and wine consumption in China dipped slightly in 2014, according to data from the International Organisation of Vine and Wine (OIV).

Spain became the world’s biggest wine exporter by volume in 2014 and repeated the feat last year, the Spanish Observatory of Wine Markets says. But its revenues still lag those of France and Italy, as most its sales are of unbranded bulk wine.

Exports already make up half of Marques de Atrio’s revenue, but only one percent of those are destined to China at present. Changyu wants that to rise to 50 percent in the medium term, Jian said.

By EMMA PINEDO Mar. 17, 2016 on Reuters

Read more here