From Marcel Merz
, at 26. May 2011 17:55
Chris Mercer – Moët Hennessy’s decision to produce Chinese ‘Champagne’ looks like a shrewd move, if only it can persuade the locals to get a taste for the stuff.
Moët Hennessy LVMH plans to produce sparkling wine (of course, they can’t call it Champagne) in China within three years, after signing a joint-venture to produce premium grapes with domestic firm Ningxia Nongken.
China’s potential as a wine market is well-documented: go to Bordeaux and it’s all they talk about. China is already the world’s fifth largest wine consumer, on 14m hectolitres per year, yet it has still to break into the top 12 wine drinking nations in terms of per capita consumption, according to the International Organisation for Vine and Wine (OIV).
It’s not just table wine, either. Rich Chinese have been buying up bottles of Lafite as if the Chateau is soon to be no more.
A serious sticking point for Moët is that China has, up to now, mostly only had eyes for red wine. Sparkling wine, and Champagne specifically, still doesn’t get much of a look-in, with volume sales in the country of 0.6m litres in 2009, according to Datamonitor figures. Indeed, sales are only expected to grow by 0.3% per year up to 2014, Datamonitor has forecast.
That said, Moët’s move into winemaking in China still looks like a good one. Firstly, China has been hotly tipped as a wine producing country in its own right. Several companies have already taken the plunge, including Pernod Ricard and Domaines Baron Rothschild.
Following on from that, China may be an emerging market that all foreign companies want a piece of, but there is increasing evidence that domestic brands in many sectors can and will compete strongly with all-comers. Currently, most Chinese wine occupies the bowels of the market, but this is liable to change – indeed, the involvement of companies like Moët make this change all the more likely.
Another plus-point for Moët is that France is extremely-well regarded in China. In its recent quarterly wine review, analyst and investment group Rabobank said of the country: “Chinese wine companies, some of which have strong ties to notable French companies, have themselves reinforced perceptions in trade and consumer circles that French wine is the epitome of wine.”
Let’s say, then, that the Chinese develop a proper thirst for sparkling wine. Champagne stocks are always going to be somewhat limited, even if not in as short supply as some would have you believe. As the CEO of Champagne Jacquart, Laurent Reintau, told just-drinks last week: “Long-term, Champagne is about value and quality. We’ve got around 35,000 hectares and we won’t be able to grow that by a lot, so it’s limited.”
Whichever way you look at it, Moët Hennessy’s move into Chinese winemaking looks like a good long-term bet.
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