Chinese nationals are buying Australian vineyards and wineries at unprecedented levels, with up to 10 per cent of South Australia’s iconic Barossa Valley now in Chinese hands.
“If I look at the last seven transactions I have personally done … six of them have been to Chinese parties,” said Stephen Strachan, director of Langley and Co, a company dealing in wine industry acquisitions.
“Most probably 50 per cent of the calls that we get into our office are from Chinese parties or from parties representing Chinese interests.”
The former chief executive officer of the Winemakers’ Federation of Australia said the investments had become “more sophisticated”.
“Probably five years ago when this started all roads led to the Barossa, and the typical conversation would be ‘I want to buy Penfolds’,” he said.
“A lot of the original parties were looking for trophy assets and the Barossa was number one, but progressively that has changed and other regions like McLaren Vale, the Yarra Valley, there’s been strong interest in Margaret River, and a little bit in Coonawarra, so Australia’s other regions are starting to have some significant success in China.”
The increased demand for Australian wine in China has driven the current purchases, with property buyers wanting to stabilise the supply of bulk and bottled wine for their Chinese market.
Australian wine exports to north-east Asia increased 51 per cent in the past financial year and were worth $1.2 billion, according to Wine Australia.
The Chinese market also overwhelmingly prefers red wine.
Barossa Grape and Wine Association chief executive officer James March said between 5 and 10 per cent of the vineyards and wineries in his region were now owned by people from China, often in partnership with existing landowners.
“I think the more successful enterprises have been where there’s a combination of Chinese investment and a retaining of local expertise around the viticulture and winemaking,” he said.
“Where the advantage has come from Chinese investment has been in that route to market, so bringing in wholesalers and customers and having local Chinese-speaking staff has really helped their brands.”
Australian vineyards attract wealthy Chinese visitors
Chateau Yaldara is a Barossa company which is now entirely in Chinese hands.
Businessman Arthur Wang bought the historic winery and vineyards in 2014 for $15.5 million, having bought another Barossa Valley winery, 1847 Wines, four years earlier.
The company, which sells 90 per cent of its product under the 1847 Wines label in more than 200 branded stores in China, has quadrupled exports since Mr Wang took over.
According to general manager Anthony Grundel, the winery’s regular tour groups were populated by high net worth individuals with a serious interest in wine.
“Those guests that come actually do spend some significant sums of money on top of what they’re spending in China,” he said.
Mr Wang lives mostly in Sydney, but the two men meet once a month to discuss the company’s marketing strategy.
There are 60 staff employed locally, 10 of whom are Chinese and focus on looking after international sales and tourism.
“We tweak the wine style to meet the Chinese consumer,” Mr Grundel said.
Other Barossa Valley wineries with either complete or partial Chinese ownership include Auswan Creek, Max’s Vineyard, which was purchased by Jia Yuan Hua Wines for just over $3 million, and Cimicky Wines, which sold in July for $6.6 million.
“The Barossa started its life out as a multicultural experiment,” Mr March said.
“We had [European] Salesian immigrants mixing with the English and the Scottish.
“Over a number of years we have not only welcomed investment, but also people moving to the area.”
Biggest wine investment in a decade
The biggest new investment in the wine industry in more than a decade is currently under construction at Yatpool, outside Mildura.
Having raised $120 million through a share placement, Weilong Wine Grape Company aims to start making wine next vintage in early 2019.
The Chinese company is in the process of planting vines and has a permit to process 84,000 tonnes of grapes, mostly red varieties.
The wine will be exported to China under the Green Dragon brand.
“It’s quite a significant development in the industry,” Mr Strachan said.
“I can’t think of an expansion or development of that magnitude that has happened in the past 10 years in Australian wine.
“Probably the key change in the past 12 months has been the interest from the Chinese parties in some of the more commercial regions in Australia, so the Riverland in South Australia, the Murray [regions] in Victoria and New South Wales and the Griffith district.
“They are specifically going into those regions because they are looking to secure lower-priced wine to be able to take into the markets they’ve developed in China.”
The Foreign Investment Review Board doesn’t isolate vineyards and wineries in its 2017 Register of Foreign Ownership of Agricultural Land, but as of June 2017, its records stated 13.6 per cent of all agricultural land was foreign held, with 2.5 per cent held by residents of China.
By Prue Adams