BEIJING Aug 2 In a few remote corners of China,
two of France's top winemakers have more on their minds than a
trade row with their most promising export market.
In three far-flung provinces, a world away from Beijing's
allegations of European wine dumping, makers of such lofty
French brands as Chateau Lafite-Rothschild and Dom Perignon
champagne are investing millions of dollars to produce vintages
they hope will put Chinese wine on the world map.
In a country where cheap plonk and overpriced mediocre wines
still define the domestic industry, the French are partnering
with Chinese investors to produce super-premium wines for
increasingly discerning drinkers at the market's top end.
They will likely charge hundreds of dollars per bottle when
the wines start appearing in a year or two, turning out deeply
rich reds and elegantly sparkling wines for wealthy Chinese
drinkers who they hope will be proud to serve local vintages
that are the equal of their imported collections.
"China deserves the production of great wines," said
Christophe Salin, president of Domaines Barons de Rothschild
(DBR), which owns the vaunted Chateau Lafite, Ch. Duhart-Milon
and Ch. L'Evangile, among other French labels. "Without wanting
to copy Lafite, we wish to produce a great wine on Chinese
soil," he added in an interview.
DBR is investing 100 million yuan ($16.3 million) with
partner CITIC, a state investment firm, to develop 25 hectares
(62 acres) of vineyards in eastern Shandong province to produce
super-premium red wine for the Chinese market.
Moet-Hennessy, the wine and spirits arm of luxury group LVMH
Moet Hennessy Louis Vuitton SA, is also looking to
make a top-end Chinese red and is planting 30 hectares (74
acres) of grapes in remote mountains of southern Yunnan
Moet-Hennessy studied climate and soil conditions at
hundreds of locations around China before settling on an area
the government calls "Shangri-La", abutting Tibet, to grow
Cabernet sauvignon, Cabernet franc and Merlot grapes.
Moet-Hennessy CEO Christophe Navarre won't divulge the
investment there but says it is borne two-thirds by
Moet-Hennessy and one-third by its Chinese partner, winemaker
"I dream one day to go back to France with a bottle of red
wine produced in the region of Shangri-La and I can say it's the
best wine in the world," Navarre said in announcing the venture
Moet-Hennessy's wine portfolio includes the vaunted Ch.
Cheval Blanc and Ch. d'Yquem, the world's most coveted dessert
wine. Its champagnes include Dom Perignon, Moet & Chandon and
Krug - and it is developing vineyards in Ningxia Hui autonomous
region in north-central China with a view to producing China's
first ultra-premium sparkling wine.
Neither DBR nor Moet-Hennessy plans to market its Chinese
wines under existing brands. Both say they want to give the
wines a unique Chinese identity - a strategy that is questioned
by some within the Chinese wine industry.
"If they don't put their brand on it then people won't buy
it at a very high price," says Monica He, who works with wine
importer Menvis in Beijing.
DBR's and LVMH's investments into China aim to capitalise on
China's growing thirst for premium wines, but could also help
their extensive line-ups of mid-priced wines and spirits.
Chinese consumers are drawn to either high-end or cheap
wine, leaving a gap in the middle of the market. By producing a
Chinese "halo" wine marque, the French winemakers could draw
drinkers to their imported mid-range lineup.
The French investors do not have plans to produce still
white wines in China, as red wine and champagne are more
fashionable for upwardly mobile Chinese wine drinkers.
China is the world's fifth-largest wine consumer, according
to a study last year for VINEXPO, an annual wine trade show that
alternates between Bordeaux and Hong Kong. The study forecast
annual consumption growth in China and Hong Kong at 54.3 percent
between 2011 and 2015, or a billion more bottles every year.
China's wine market is dominated by a few large local
producers that make bulk and mid-priced wine, and some
premium-priced wines selling for more than $100 a bottle, but
these are usually considered far inferior to much cheaper
So can China produce something at the highest level?
"The potential there is to make something very, very good,"
says Jim Boyce, who follows China's wine industry on his blog
Grapewallofchina. "There are a lot of people who've been telling
me for years that Yunnan is where it's going to happen."
Meanwhile, Beijing and Brussels are in talks to end their
trade dispute over wine, with a settlement seen as likely after
the two sides struck a deal last week in a separate row over
Chinese solar panel exports to Europe. Beijing
had launched its investigation into European wine sales after
the European Union moved to impose steep import duties on
Chinese solar panels.
(Reporting by Terril Yue Jones; Editing by Mark Bendeich)