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Chinese collecting Bordeaux chateauxInvestors buy up venerable producers in famous region to supply French wine to newly affluent mainlanders who are increasingly developing a taste for itBloomberg27 February 2012On a glass coffee table in his Hong Kong flat, Peter Kwok eagerly unrolls an aerial photograph of the wine estate he bought in November.His Chateau Tour Saint-Christophe grows merlot and cabernet franc grapes in the St-Emilion appellation of Bordeaux. With his finger, he traces the outline of its 17 hectares of old vines - and then points out a dark-green slope.“Those vines may produce the best wine,” says Kwok, managing director of USI Partners, a Hong Kong holding company whose investments include mainland hotels.Kwok, 63, is one of at least 12 Chinese investors who have recently bought a chateau in Bordeaux, France’s world-famous wine region noted for great reds such as Chateau Petrus and Chateau Mouton Rothschild.Since 2008, these investors have purchased mostly small, little-known and sometimes distressed wineries, and at least 10 more deals are in the pipeline, according to the chateaux and local real-estate firms.Kwok, who bought Tour Saint-Christophe from French wine, beer and soft drinks company Castel Group, declined to reveal the price. A Bordeaux estate similar to Kwok’s but with one-third the vineyard area was being offered last month for 3.5 million euros (HK$36.34 million).During the past two centuries, Bordeaux’s grand stone chateaux have attracted buyers from Belgium, Germany, Japan, the Netherlands, Britain and the United States.In 1997, Kwok bought his first estate, Chateau Haut-Brisson, also in St-Emilion, where the Romans planted grapes in the second century.On a sunny morning in June, Kwok walks through his vineyard at Haut-Brisson, taking in the landscape that attracted him to wine country. Bees buzz above the leafy vines behind his chateau, a cream-coloured building with a tile roof and a stone terrace edged with lavender.“I like to feel the beauty of these surroundings,” Kwok says. He says he’s giving this chateau to his elder daughter, Elaine, 31, who helped tend these vines when she was a teenager.Kwok and other investors are buying chateaux as demand for expensive Bordeaux wines soars in China. Consumers on the mainland swallowed almost 20 per cent of Bordeaux’s exports in the year to October 31, a 122 per cent jump over the previous year, according to the Bordeaux Wine Council. China became the biggest importer of Bordeaux wines by volume, surpassing Germany.The Chinese proprietors are spending to improve their wines before selling some or all of their production directly, without a distributor, through their own hotels and wine stores in China.“For an individual, having your own wine is a symbol of power, achievement and good taste,” says Jean-Luc Coupet, managing partner of Wine Bankers & Co, a mergers-and-acquisitions advisory firm in Paris specialising in the wine business. “And in China, Bordeaux is the most famous wine region.”For Kwok, making wine in Bordeaux is part of his long love affair with French culture. His Chinese parents raised him in Saigon, Vietnam, where he says he learned to admire French architecture, dark-roast coffee and crunchy baguettes. He earned a PhD in finance from the University of California, Berkeley, and later served as chairman of Citic Resources Holdings, the energy subsidiary of China’s biggest state-owned investment company, Citic Group, from 2002 to 2007.Kwok, who bought Haut-Brisson as a family vacation spot so his three children could learn French, began taking wine production more seriously a few years later. He added vineyards with better terroir and hired Michel Rolland, the region’s most influential wine consultant, to improve the vineyards and cellar.“The wine business isn’t easy; you need to have passion,” Kwok says. “The wines absolutely have to be good. Achieving that took me nearly 10 years.”
Kwok - who bought his third Bordeaux chateau last month - now sends 30 per cent of Haut-Brisson’s annual production of 90,000 bottles to the hotels he owns in China. His 2006 Haut-Brisson La Reserve fetches 1,050 yuan (HK$1,293) a bottle at his Four Points by Sheraton and St Regis hotels in Lhasa, Tibet. He also plans to sell the wine at his Westin hotel in Xian, Shaanxi, which opened last month.On an iPad, he flips through photos of the St Regis’ 24-karat-gold pool, lined with mosaic, and its wine bar, Decanter by Haut-Brisson.“People are worried about fakes now,” he says. “They know our wine isn’t one.”In France, per capita wine consumption has fallen for more than three decades, according to FranceAgriMer, a government organisation that oversees the food and wine industries. The decline has hurt smaller chateaux in less prominent Bordeaux appellations and has provided opportunities for Chinese buyers looking for a foothold in the region - and good deals.Properties in less fashionable Fronsac, located northwest of St-Emilion, sold in 2010 for an average of only 30,000 euros per hectare, less than half the price in 1991, according to Safer Aquitaine-Atlantique, a regional agency that gathers statistics on vineyard sales in Bordeaux.Haiyan Cheng decided to buy run-down Chateau Latour-Laguens in 2008 after viewing the green vineyards and blooming cherry trees from atop one of its 15th-century grey stone towers. Cheng, who goes by the name Daisy in France, heads the wine division of Qingdao-based Longhai International Trading, which her father owns.She’s renovating her 60-hectare estate, adding a tasting room, a French-style kitchen for entertaining and accommodation for Chinese tourists and wedding parties.“My father loves to drink wine, and because of that, I became very fascinated by wine when I was younger,” says Cheng, 33, who grew up in Qingdao, Shandong.Jean-Baptiste Soula, Cheng’s estate manager and technical director, and Stephane Toutoundji, a winemaking consultant, have replanted vineyards and purchased new barrels to improve the chateau’s once rather ordinary wines. They’re making them smoother and less tannic to suit Chinese tastes. The new, embossed gold label is also designed to appeal to Chinese customers.While Chinese investors own only a tiny fraction of Bordeaux’s 8,650 winegrowing estates, their arrival has spurred concern among some locals.But property agent Daniel Carmagnat, whose firm had a contract to sell Latour-Laguens, says Chinese buyers could help revitalise regions like Entre-Deux-Mers, where the chateau is located, and make Bordeaux wine better known in China.
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