Chinese investors snap up struggling Chateaux

China’s enthusiasm for Bordeaux wine has been well documented over the last few years. Recently however, China’s wealthy elite have begun to snap up more than just bottles and cases. Bordeaux real estate is increasingly being seen as the status symbol of the truly sophisticated Chinese investor.

Peter V Kwok is a perfect example of this new breed of Chinese oenophile. Kwok, managing director of USI Partners Ltd- a Hong Kong holding company, has recently acquired the deeds to all 17 hectares of Chateau Tour Saint-Christophe in St Emilion, Bordeaux. While Kwok was educated in the US and eventually returned to China to forge his career, he was raised in Saigon, Vietnam, so had an appreciation for French culture from a young age. Now 63, Kwok is throwing all his considerable energy behind his new project.

Kwok is keeping to the current trend of Chinese investors picking up mid-range properties, usually little-known and often struggling, and respectfully modernising and improving the wines produced. The Chinese are yet to acquire a property included in the 1855 classifications, which define the top wines of the region, but it is surely only a matter of time.

The Chinese now consume over 20% of Bordeaux’s total output every year making it the largest importer of Bordeaux by volume, and many of the wines produced by Chinese vintners are destined to be sold in Hong Kong and mainland China. Many of Kwok’s wines will end up in the hotels he owns in China and Tibet. Kwok has also bought vineyards in Pomerol and Lalande de Pomerol. His Haut-Brisson La Reserve 2006 will fetch around £140 in his hotels, Four Points by Sheraton and St Regis in Lhasa in Tibet.

Becoming directly involved in wine production allows Kwok to be on the forefront of the growing luxury goods market in China. In France, for example, per capita wine consumption has been falling year on year for the past three decades, while in China, however, it continuing to rise. The decline of wine drinking in France is accounting for the difficulties of many lesser known Chateaux around Bordeaux. This slump in fortunes has allowed Chinese investors to get in on the ground floor and rescue otherwise doomed businesses. What the French may no longer want, the Chinese will take, especially if the Chinese producers of these wines understand the market back home.
Haiyen Cheng, for example, has managed to reverse the fortunes of Chateaux Latour-Laguens after she took over the reins in 2008. She has renovated the estate, added a plush tasting room, a huge kitchen and provides catering for Chinese tourists and wedding parties. The vineyards have been replanted and there has been a large investment in high quality oak barrels in an attempt to improve a once indifferent brand. The wines are becoming smoother and less tannic in order to better appeal to the Chinese palate; the wines will then be sold in wine shops in China owned by the same company and will fetch between £25 and £300 a bottle, wines once sold in France for about £12. Cheng is keen to show the wines at European wine fairs as she believes that having a wine on the shelves in Paris increases its prestige back home in China.

So, how long before the Chinese start to pick up the top Bordeaux estates? Namely those featured in the 1855 classification? In July Chateaux Lascombes, a second growth in Margaux sold for £165 million. The losing bidder was Chinese.


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