China is more important to the wine industry than many professiomals imagine. It is not by chance that the beginning of the fall in global consumption in 2017 coincided with the end of the wine drinking boom in China, It was not only Australia that was affected by Chinese vinous disaffection; sales of domestically-produced wines plummeted too, as have those of all but the most premium baijiu local spirit.
Today, as Beijing adopts a range of ‘bazooka’ measures to boost consumption and reboot a sluggish economy, there are hopes that these wines and spirits may benefit too. Apart from a cut in mortgage rates and trade-in programmes for cars and other goods, in November, the Chinese government launched food festivals in Beijing, Chongqing, Guangzhou, Shanghai and Tianjin to promote tourism, shopping and dining. If Chinese consumers rediscover a taste for locally-produced wine, optimists believe they may also be tempted to buy some imports.
Treasury support
At the same time as the government was talking about encouraging consumer spending, Treasury Wine Estates (TWE), a company with a foot in both camps as producer of wine in Australia, the US and China displayed its confidence in the Chinese wine market by acquiring of a 75 per cent stake in Ningxia Stone & Moon Winery Co. Ltd in the Ningxia Hui Autonomous Region of China. The deal, which will be finalised by the middle of next year, will cost around AU$27.5m ($17.5m)
The winery has 43ha of vineyards and a modern winery that can be easily expanded. Grape varieties grown include Cabernet Sauvignon and Marselan, which are already used by TWE's flagship brand Penfolds in some of its Chinese wines. TWE also has the option to acquire the remaining 25% equity in five years time.
Developing market
‘This acquisition is in line with our vision of expanding our presence of luxury wines in key international markets, while increasing our commitment and investment in China's wine industry. We are very grateful for the support of the national and local governments, our local partners, industry organisations and the wine community,’ says Tim Ford, CEO of TWE. XuanHao Kang, founder of Stone & Moon Winery, said: ‘We are proud to join Treasury Wine Estates, a company known for its commitment to producing world-class luxury wines. This partnership marks an exciting new chapter for Stone & Moon Winery and will enable us to showcase the exceptional quality of Ningxia wines to a global audience’.
