Changyu Cheers Chilean Winemakers With Spending Spree
(Beijing) — Changyu, China’s largest listed vintner which has in recent years been trying to quench domestic thirst for imported wines, has continued its buying spree with a $41 million (281 million yuan) purchase of several Chilean wineries.
The nation’s longest standing winemaker Yantai Changyu Pioneer Wine Co. Ltd. has continued to quaff on foreign vintages even as many of its previous acquisitions leave an astringent aftertaste on the firm’s finances.
Shenzhen-listed Changyu, which already controls two wineries in France and a century-old bodega in Spain, is advancing in South America, by acquiring an 85% stake in the eighth largest exporter of the liquid in Chile — Santiago-based winemaker Inversiones Beth-Wines Limitada.
China is now the largest patron of Chilean vintages, overtaking the U.S last year, chugging down nearly 200 million bottles harvested from vineyards of the world’s fourth largest wine exporter.
The Chilean firm’s line of cost-efficient wines look destined to satisfy the palate of mainstream Chinese consumers, and Changyu plans to introduce Chilean wines from the company, which exports over 90% of its output, into China on a larger scale. Despite this, China is one of the less tapped areas in Beth-Wine’s global strategy, Changyu said in a Friday stock filing.
Changyu believes it’s lower-priced wines will complement its existing range of imported wines including cognac, and Bordeaux through two French chateaus acquired in 2013 and 2015, and a full range of Spanish bottled wines from Marques del Atrio, a bodega Changyu began controlling in 2015.
But these investments have yet to pay off through successful marketing to thirsty Chinese shoppers. Less than 0.1% of profit and 6% of revenues for 2016 were contributed by overseas affiliates. A year into Changyu’s ownership, Spanish vintner Marques del Atrio is now in the red with a 7 million yuan loss, reversing many years of million-euro profits.
China is steadily acquiring a genuine taste for the drink, after a newfound, albeit mostly superficial, enthusiasm for wine a decade ago was curtailed by a heavy-handed austerity drive as President Xi Jinping took office.
Wine, then, was generally viewed as a tasteful gift and a status symbol, and the no-nonsense crackdown on bribery and excessive gift-giving led winemakers to cut production by nearly 15% from 2012-2013. In years before, both production and demand had been growing at double digit rates, according to a report by the China Alcoholic Drinks Association (CADA) .
Since then, China has begun tipping its glasses once more, with a growing middle class that is focusing more on the contents of the bottle rather than brand and packaging. And affordable imported wines of decent quality are accompanying an increasing number of meals in China.
In fact, the volume and average price per liter of imported wines has increased by about 30% respectively over the past 6 months, according to data published by various ports in China.
Contact reporter April Ma (email@example.com)
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