A Toast to China’s Wine Industry

The Wall Street Journal thinks that the budding Chinese wine industry could be a rewarding investment:

Beverage consumption is rising among the Chinese, with the alcohol market expanding 22% in 2009 versus last year. That makes wine attractive even if it just keeps pace with other drinks. And if the economic recovery continues, wine is likely to become more popular, particularly among the growing urban middle class.

Who stands to gain most from this trend? French wine exporters are already rubbing their hands at the rapid growth of a new market. The popularity of red Bordeaux wine in particular led to a near 15-fold increase in wine imports to China from France between 2002 and 2008; China is now the eighth-largest importer of Bordeaux globally. In the past couple of years, Chinese investors have even started buying wine assets in France; Chateau Richelieu and Chateau Latour-Leguens are both now in Chinese hands.

But there are local Chinese players that have managed to take advantage and increase their market share in the past few years, even as foreign wine imports have gained traction. In particular: Yantai Changyu Pioneer Wine, the leading listed Chinese wine maker. Its share of the overall Chinese wine market by revenue had grown to 12.5% by the end of 2008, up from 11.3% in 2005.

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