Low Bordeaux winery prices attract Chinese buyers
December 29, 2013 Leave a comment
Low Bordeaux winery prices attract Chinese buyers
Staff reporter
2013-12-29
The Chinese are lining up to buy vineyards in France, eyeing the lucrative business opportunities that come from selling wine in China given the country’s expanding wine consumption.Seventy-two wineries in the French city of Bordeaux were sold over the last two years, with over half of them, or 44, having been sold to Chinese buyers, according to some estimates.
The frenzy is partly the result of the fact that prices of vineyards and wineries in Bordeaux have reached historic lows, attracting deep-pocketed Chinese enterprises and billionaires, including Hao Lin, who bought Chateau de la Riviere for a record €30 million (US$41 million).
There has also been a significant increase in the number of Chinese merchants purchasing wineries in France, according to a staffer serving at the Chinese market at Maxwell-Storrie-Baynes, a consultancy specializing in the sale of Bordeaux wineries and vineyards.
The staffer, who went under the pseudonym, Lucie, revealed that some of her Chinese clients were obsessed with the industry, including one who entrusted Lucie’s firm with a sum of money for management after seeing news of a winery up for sale without even inspecting the winery in person.
Despite an increase in the number of Chinese buyers, experts stated that these buyers still accounted for a small share of the ownership of wineries in Bordeaux and most of the wineries they had purchased were cheaper, smaller wineries, priced between €2 million (US$ 2.7 million) and €5 million (US$ 6.8 million).
The Chinese now own less than 1% of the 8,000 wineries located in Bordeaux.
Chinese buyers are motivated to buy given the lucrative returns that stem from selling wine to China, helped by a control of the supply chain and an ever-widening wine consumption market in China.
A bottle of wine is manufactured at a cost of between €2 (US$ 2.7) and €3 (US$4.1), but can be sold for up to €30 (US$41) to €50 (US$68.4).
Imports of wine produced in Bordeaux have skyrocketed over recent years. By the end of 2011, the amount of wine imported by China from Bordeaux soared 91% year-on-year, making China the largest export market for wine.
Chinese buyers are also eyeing the profitable returns on their investments. A French owner of a Bordeaux winery might expect to see a 3%-8% return on his investment, a Chinese buyer, on the other hand, might see a return on investment exceeding 10% after three years of operations, according to Lucie.
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