(Changes dateline, adds byline, details, quotes from China)
By Terril Yue Jones
SHANGRI-LA, China Feb 23 French wine and
spirits maker Moet Hennessy aims to produce a super-premium red
wine at the foot of the Himalayan mountains in southern China,
seeking to reach the palates of wealthy Chinese wine
consumers, although results won't be known for years.
Moet Hennessy will partner with Chinese liquor maker VATS
Group to produce the wine primarily from Cabernet sauvignon,
Merlot and Cabernet franc grapes, Moet Hennessy Chief Executive
Christophe Navarre said on Thursday.
Those grapes, the main varietals used in Bordeaux red wine
blends, will be largely planted by the joint venture, although
some superior vines from existing VATS vineyards at the foot of
the stunning snow-capped Mount Meili in Deqin county may be
"What's important to produce a top-quality wine is the soil
and the climate," Navarre said at a signing ceremony in the town
of Shangri-La, the seat of government of the Tibetan autonomous
region in far northwest Yunnan province that includes Deqin.
The average altitude of the vineyards, some 2,400 meters
(about 8,000 feet), is higher than most winemaking and could
pose risks, but those might also be mitigated by Shangri-La's
"The team spent a lot of time in China to find the right
location to produce this top-quality red wine" said Navarre.
The combination of soil, sunshine and climate make it ideal
for the type of grapes to make robust, Bordeaux-style wine that
should be ready in three to four years, he said.
Foreign wine makers are risking millions of dollars to
develop wines that take years to come to market, against the
uncertain backdrop of where the economy and consumer spending
will be in five years.
Although wines produced in China have, by many accounts,
improved greatly in recent years, in the decade or more that
foreign firms have been setting up local partnerships, few
investments have produced widely marketed wines, and the highest
quality wines, and prices, remain elusive.
For its part, Moet Hennessy envisages some 30 hectares of
vineyards, but the company best known for its Moet-Chandon
champagne and Hennessy cognac is not making any predictions.
"The objective here is not market share, not sales revenue,"
Navarre said. "The first objective is to produce the best
Although the name of the eventual wine has not been decided,
the joint venture launched Thursday will be called Moet Hennessy
Shangri-La (Deqin) Winery Co Ltd. The company did not disclose
details of its financial investment.
To be sure, China's wine market is rapidly moving upscale as
increasingly affluent consumers turn to wine, which has been
marketed in the country as a prestigious drink.
China last year became the world's No. 5 wine market,
according to a study this month by trade show group Vinexpo and
International Wine and Spirit Research, a market researcher.
Chinese wine consumption will grow dramatically by 54
percent from 2011-2015, about a billion bottles, the study said.
Foreign winemakers, particularly from France, are investing
in the Chinese provinces of Shandong in the east, and Ningxia
and Gansu in central China to produce high-end wine.
This is Moet Hennessy's third investment in China in five
years following its acquisition of Chinese white-spirits brand
Wenjun in 2007, and an investment last year to produce a premium
sparkling wine in Ningxia.
The area Moet Hennessy picked in Deqin is in a dry and warm
valley along the Lancang River, with moderate temperatures and
"The growing period is long, which allows slow maturation of
fruit, so this region is ideal for growing grapes," says Duan
Changqing, a wine expert and professor at Beijing Agricultural
Jim Boyce, a Beijing-based expert on Chinese wine and author
of the blog Grape Wall of China, agrees that China offers the
best potential growth for the foreseeable future.
Despite China's high wine consumption, he says, "the average
person drinks less than one bottle per year. So smart money says
establish a base here.
"China is such a huge market, with everything from
billionaires who can afford to drink Chateau Lafite daily to
those whose upper limit is 50 yuan ($8), so there are plenty of
niches to fill."
(Reporting by Lionel Laurent; Editing by Chris Lewis)