Chinese tycoons rush for Australian wineries

THE COAL-RICH hills of Australia’s Hunter Valley have long fed China’s steel furnaces but the winemaking region is riding a fresh boom as the Asian power’s middle classes toast their new wealth.

Mining delegations are being replaced by wine enthusiasts as China’s upwardly mobile millions get the taste for an expensive drop, and Australia’s vintners are turning their efforts towards the lucrative new market.

“Every buyer that I have on my books right now is Chinese nationality, every one,” said Cain Beckett, an estate agent in the Hunter Valley.

“There are parallels with the heady days when everyone was buying everything and spending cash hand over fist. That hasn’t happened for 10 or 15 years so it’s interesting times.”

Beckett sold eight vineyards to Chinese investors in the latter months of 2011, some of which had been on the market since the global financial crisis and went for A$120 000 (R988 491) above asking price as buyers haggled.

Wine from the vineyards is destined for hotels, restaurants and liquor shops across China.

Times have been tough in the winemaking district about 150km north of Sydney and Beckett said selling “eight of those at a time is pretty shocking, it has blown us away”.

China is Australia’s fourthlargest wine market and the value of exports to the Asian giant has soared in recent years, from a little over A$100 million in 2008 to more than A$250m in 2011. Australia is second only to France in terms of wine exports to China by both volume and value.

Lucy Anderson, Asia director for the government-backed industry group Wine Australia, said overall consumption was increasing but growth was especially notable at “higher price points” as tastes matured.

“I think the Chinese wine market is incredibly complex, however, I would describe it as rapidly developing, not emerging,” Anderson said.

Major wine maker Tyrell’s said China had gone from accounting for 2 percent of its business five years ago to “around 35 percent and growing”, mostly involving the wholesale of its wine under private Chinese labels.

Tyrell’s was working closely with a Chinese company that had just purchased one of the Hunter vineyards, and international manager Grant Bellve said the rush of foreign buyers had been a blessing.

“If they didn’t purchase, where would those wineries be? Would the banks own them?” he asked.

Bellve added that while the Chinese buyers could afford to buy the wineries, they still needed production expertise.

“Most of (the Chinese buyers) have money that you and I would only dream about. If they do buy wineries then they need the expertise, (and) it allows you to get potential new distribution through unbelievable channels.”

Bellve said it was too early to say whether Chinese ownership of Australian vineyards would be a permanent trend or how positive it would be for the industry in the long term.

“I think they like to have somewhere that they can bring their customers to rather than saying ‘this is a winery that produces for us’. They can put their flag up,” he said.

“The biggest thing… is to get them to understand that wine is not a commodity, it’s an agriculture. They think it’s like a production line, and that’s the key thing, I think, in getting them to understand the business.”

Neil Mcguigan, from premier label Mcguigan’s, said the purchases to date of a few small wineries in Hunter Valley were for hobby or status purposes and “not a game-changer for the Australian wine industry”.

Mcguigan said of the Hunter Valley: “The French are here, the Americans are here, the New Zealanders are here. There are a lot of countries in here already so why not the Chinese?” – SAPA-AFP