Updated: May 11, 2020
Vineyards, wineries and expensive wine have always been associated with wealth, luxury and style. They have traditionally been the domain of prominent or aristocratic families who established their legacies on land perfect for grape cultivation. Recently, however, there has been a new arrival on the scene. The Chinese are the world’s number one consumer of red wine, and now they are putting their money where their mouth is. Chinese investors and funds have begun buying up vineyards all over the world, so much so that the price of prime vineyard real-estate has driven up in celebrated wine-making areas such as Sonoma in California, Barossa Valley in Australia, and Hawke’s Bay in New Zealand.
Val de Vie Estate
While the regions of the world’s most famous wines, such as Burgundy, are still a bit out of reach for most investors, wealthy Chinese nationals are fast taking hold of established wine farms in South Africa, Australia, and even other regions of France. In 2013, Yangzhou-based Perfect China initiated the country’s investment in the South African wine industry by purchasing the Val de Vie estate in the Western Cape. The estate contains a manor house and a wine cellar on its 25-hectare vineyards. Since then, a deal made in December 2015, which gave majority shares in the expansive Swartland Winery to Chinese tech entrepreneur William Wu, has given analysts the impression that Chinese investors are beginning to make a significant change in the ownership demographics of South African wine territory.
Western Cape’s Swartland Winery
Experts suggest that this trend matches the increasing demand in China for wines from various regions around the world. The wine market in China is expanding rapidly and investors from the country have identified this as an opportunity to contribute to the supply of wine imports in China. Wu, who invested in the Western Cape’s Swartland Winery, reaffirmed this opinion, saying, “In China I have a ready demand for the quality and volume of wine Swartland produces.”
Another area affected by the keen interest of Chinese investors is Australia. In 2014, Credit Suisse predicted that they will spend AUD44bn (USD39bn; £24bn) in Australian real estate over the following seven years. According to the owner of Jurds Real Estate agency in New South Wales, Alan Jurd, the increased demand for wine in China is not the only reason that Chinese nationals are investing staggering amounts in overseas wine industries – wineries are also considered to be trophy purchases by the wealthy Chinese elite. Jurd states, “China-based wine importers are looking for a beautiful and prestigious winery in Australia as a showcase for their business and to impress their Chinese customers”. A notable purchase was that of the Yaldara winery in South Australia’s Barossa Valley, which was purchased for $15.5m by Chinese businessmen and NSW resident Zhitai Wang. Another vineyard in the same region, the 1847 Winery, is already owned by the two men.
“China-based wine importers are looking for a beautiful and prestigious winery in Australia as a showcase for their business and to impress their Chinese customers”.
Interestingly, Chinese investors have not only stuck with purchasing wineries in successful but lesser-known wine regions in South Africa and Australia. France, historically the most lauded country for producing wine, is also an area that has been given a lot of attention by Chinese investors. Over one hundred Bordeaux châteaux (wineries) in France are now owned by Chinese nationals or Chinese business entities. While investment in this legendary wine-making region marks a step towards Chinese immersion in global winemaking, Chinese investors have generally not been overconfident, and have shown an interest in mid-range châteaux. These buyers invest on average 10 million Euros in acquiring estates in the Bordeaux region, and then export more than 80 percent of their wine back to China, where they can sell it at around 10 times the price of a bottle in France, owing to China’s heavy demand for foreign wines.
Yaldara Winery, South Australia
Austrade, an investment company, has suggested that another reason for the sharp increase of winery sales to Chinese investors can be accounted for by reasoning that owning foreign wineries allows Chinese businessmen to react quickly to any changes in consumer demand in China. Whatever the case, it seems that the growing wine culture in China is starting to shape the investment decisions of the Asian giant’s wealthy businessmen. All over the world beautiful and successful wineries are being bought up by Chinese investors, and it’s a trend that does not seem to be ending in the near future.