TIANJIN - Dynasty Fine Wines Group Ltd, partly owned by French liquor giant Remy Cointreau, plans to buy foreign vineyards to produce fine wines on the assumption that burgeoning demand in China will accelerate sales.

In its planned first foreign acquisition, the Hong Kong-listed company may seek for acquisition targets among the vineyards in France and Australia, Bai Zhisheng, executive chairman of Dynasty Fine Wines, said in an interview with China Daily.

"We have visited more than 20 wineries, and the ones in France and Australia are likely to be on our acquisition list," Bai said. "We are looking for vintages in both Old World and New World wine regions. I want the best quality of the Old World vintages and the production scales of New World wines at the same time."

Old World wines are those produced in traditional wine-growing areas of Europe. New World wines are produced outside of Europe, in particular from Argentina, Australia, Canada, Chile, South Africa, New Zealand and the United States.

Bai didn't reveal details of the timing of the planned acquisitions or a proposed purchase price.

He said China's lack of suitable locations for wine-growing has prompted Dynasty to seek acquisitions abroad, where differing harvest seasons will help complement the company's production schedule.

The company has raised its production capacity from 50,000 tons to 70,000 tons this year, and plans to raise its annual capacity to 100,000 tons in three years, he said.

Dynasty, which rivals Great Wall and Changyu Winery in the Chinese market, registered a net profit of 114 million yuan ($17 million) in the first half of this year, up 16 percent year-on-year.

Spurred by rising consumption of wine among the Chinese, Bai estimated that the company will continue to see an annual double-digit growth in the next decade.

He said revenue is expected to hit 1.5 billion yuan by the end of this year, an estimated increase of 14 percent year-on-year. Net profit is expected to jump 18 percent for the same period.

According to a report by International Wine and Spirit Research, China - as the fastest growing market for wine consumption in the world - is on track to become the world's sixth-largest market in 2012.

China's wine production amounted to 960,000 tons last year, an increase of 27.63 percent from 2008, according to the National Bureau of Statistics.

"China's wine market is at an early growth stage. Consumers are beginning to appreciate wines," said Duan Changqing, director of the Research Center of Grape and Wine at China Agricultural University in Beijing.

But the market is highly promising since the annual consumption is only 0.5 liter per person, compared with the world average level of 7.5 liters, he said.

China Daily

(China Daily 09/29/2010 page13)