Corrected: China's palate ripens for European vineyards, chateaux

Wed Mar 14, 2012 8:21am EDT
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By Farah Master

HONG KONG (Reuters) - Chinese state-owned firms, private corporations and wealthy individuals are buying European vineyards as they look to capitalize on a growing domestic thirst for foreign wine.

Demand for French, Italian and Spanish wines has boomed in the world's second largest economy over the last few years, bolstered by the growth of China's super-rich and burgeoning middle class, who are knocking back the vino and the vin in record quantities.

David Guillon, of IFL, a Hong Kong based firm that sells French vineyards, castles and luxury properties, said IFL completed six multi-million euro (dollar) transactions of vineyards in France's Bordeaux region with Chinese investors in 2011. He expects this number could double in the coming year.

Big ticket Chinese investors that have bought vineyards in 2011 include state-owned grain trading giant COFCO.

IFL is currently in close negotiations with two major state-owned companies, multiple private firms as well as Chinese celebrities and football players.

"The demand is getting very huge and it has been a very rapid evolution," said Guillon, adding that 80 percent of IFL's buyers in Asia come from Hong Kong and China.

"For the state-owned companies, these firms can be conglomerates which have nothing to do with the wine industry, hold a large amount of cash and want steady returns," he said.

While global wine prices have softened from skyrocketing levels set in the last two years, private auction house Christie's sold all lots at its February wine sale in Hong Kong, fetching results that were more than triple pre-sale estimates.   Continued...

A bunch of grapes is seen during the harvest in Fabbri's vineyard in the Chiantishire in Tuscany, south of Florence, October 4, 2011. REUTERS/Giampiero Sposito