China Buys Big in Bordeaux Wineries

2013 saw a wave of Chinese investment in Bordeaux, and bigger deals may be on the horizon
Dec 20, 2013

Bordeaux has long welcomed new investors in its wine business, be they English, Dutch, German, American or Japanese. In the past decade, the Chinese have become the dominant foreign investors in the region, though it is impossible to accurately calculate how many properties they’ve bought. Karin Maxwell, sales director at real estate broker Maxwell-Storrie-Baynes, estimated that more than 60 châteaus will be Chinese-owned by the end of 2013. Maxwell, whose agency has a dedicated “China desk,” said there have been more than 20 transactions during the last 12 months.

Bordeaux is an attractive investment, especially because demand for even low-priced Bordeaux wines remains strong in China. Châteaus are also an attractive asset for successful Chinese business leaders looking to invest in property outside Hong Kong and mainland China’s high-priced real estate markets.

Transactions are typically shrouded in secrecy. “Business addresses or indeed the geographical sources of the purchase funds are not always the same as the owners,” said Michael Baynes, executive partner at Maxwell-Storrie-Baynes, the exclusive affiliate for Christie’s international real estate in the southwest of France.

In just the past four weeks, two estates—Domaine Andron (AOC Haut-Médoc) and Château Mylord (AOC Bordeaux Superieur)—sold to undisclosed Chinese investors. Andron, with 17 acres and a 30,000 bottle production, was previously owned by four Dutchmen. It was sold in November to an unidentified mainland Chinese entrepreneur with no ties to the wine or spirits trade. “We don’t have an historic castle, but I think he liked the location, we have one of the region’s best winemakers, and the wine gets good ratings from Wine Spectator,” said general manager Erik Wuite.

Wuite’s management team, including technical director Jean Michel Dubos (previously at Château Beauséjour Duffau-Lagarosse in St.-Emilion), will remain in place. “Part of the production will be shipped to China,” said Wuite. “But a large part of the production will remain available to present customers in the United States, France, the Netherlands, Germany and Switzerland.”

The new owner of Mylord, with 108 acres under vine and an 18th century manor at Grezillac, is also unknown. Maxwell-Storrie-Baynes would only reveal that he was from Hong Kong and was one of the first in Asia to be inducted into the local wine group the Commanderie de Bordeaux. The transaction was announced on Dec. 6. “It has been a pleasure to work with such a knowledgeable Chinese gentleman whose appreciation of wine and sensitivity to the château’s history greatly assisted the transition,” said Baynes.

In some cases, Chinese investors bring a windfall to owners facing an uncertain future. Mylord, which will be renamed Milord, has been in the Large family for five generations, but former owner Michel Large was nearing retirement with no obvious successor. Then the vineyard was hit by hail in the storm that devastated parts of Entre-Deux-Mers last year.

Not all these Chinese investors are hiding their identities behind holding companies. Many arrive in Bordeaux eager to join the wine scene. In the very north of the Médoc, Huaili Zhong, an industrialist from Guizhou who heads spirits producer Moutai, recently acquired 247-acre Château Loudenne. Zhong also bought Château Dallau in Fronsac in 2012.

Meanwhile, Yi You and Hongtao You, brothers who divide their time between Hong Kong and Vancouver, British Columbia, and made their fortune in pharmaceuticals, have purchased several estates since last June, including Château Moulin à Vent (AOC Moulis, 56 acres), Vieux Coutelin (AOC St.-Estèphe, 24 acres), Château Bourdicotte (AOC Bordeaux, 260 acres), Château Grillon (AOC Sauternes, 22 acres) and Château Grand Ferrand (AOC Bordeaux, 197 acres). They also own vineyards in Tuscany and an organic wine estate, Château La Salagre, in Bergerac.

For the most part, these are relatively modest deals, but 2014 could usher in much bigger sales. A Beijing businessman recently put $164.2 million on the table for a classified-growth château in the Médoc, according to a broker familiar with the deal. The seller pulled out at the last minute. While this could be a negotiating tactic, the broker said it was hampered by complications, including cultural differences between the French and Chinese. “In stratospherically expensive deals, when cultural differences are so vast, it’s extraordinarily difficult,” agreed Baynes.

Winery Purchases and Sales China France Bordeaux News

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