Investors betting on China’s middle class to booze it up

on 16/12/10 at 12:39 pm

Industry

Private equity investors are betting China’s hard driving middle class can be convinced to relax and have a drink.

Why else would a top global firm like KKR & Co. join other investors in a more than $100 million deal to back the operator of China’s largest network of liquor stores?

Earlier today KKR said that it had done just that, and joined New Horizon Capital, a Chinese private equity firm founded by Winston Wen, the son of Chinese premier Wen Jiabao, in financing VATS Liquor Store Co.

Of all the investment opportunities in China, why liquor stores? For China’s consumers, VATS offers a trusted source for high-end Chinese and imported liquors, in a market that is overrun with fakes, said one person with knowledge of the deal.

China’s business culture has long cultivated heavy drinking as a part of deal making, but as elites begin to indulge in the luxury lifestyle, recreational drinking is growing, and high-end brands are the order of the day.

{Full story via WSJ}

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