Why Chinese Investors Buy Napa Wineries

on 22/03/12 at 11:53 am

Wine

Few topics are hotter in the industry than the Chinese market for U.S. wines, but less has been reported about a concurrent trend—Chinese nationals are avidly buying vineyards and wineries in Napa Valley. In a reversal of historic fortune, 19th century immigrants came to California in search of gold. Today, wealthy Chinese nationals have begun to invest in the Golden State for safety.

Sean Maher of Maher Advisors addressed both China’s thirst for wine and its growing acquisition of wine properties during the sixth annual seminar Best Practices for Owning and Operating a Winery in Napa. The two-day seminar conducted by The Seminar Group covered many topics of interest to winery owners and managers, grapegrowers and advisors to the industry.

Maher pointed out that China potentially could become the largest wine-consuming market in the world, but its internal market is still in its infancy. Nevertheless, the U.S. industry faces a lot of work to fully exploit this market. France dominates Chinese wine imports with half the market; while
California has earned a very positive image overall, the U.S. has less than 7% share of wine imports. Australia and Chile are larger suppliers.

Its large population is one reason for China’s rich potential. China is home to six of the world’s 25 largest cities—including Shanghai, which has nearly 23 million residents.

The Chinese population consumed about 156 million 9-liter cases in 2011, placing it in fifth place among the top wine-consuming nations worldwide, according to Vinexpo’s study by ISW/DGR Research Institute. Chinese consumers tend to want to serve expensive wines to impress people, and Bordeaux wines remain their first choice.

The Chinese already have a tradition of drinking locally made wine, but overall, consumption per capita is low, slightly more than 1 liter per person per year. That compares with 7 liters in the U.S. and more than 40 liters per capita in France and Italy.

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