China's Bright Food Group will pay an undisclosed sum for a 70% stake in Bordeaux wine exporter Diva, a privately-held business that reports 45% of its sales in China and 60% in Asian markets, Shanghai-based Oriental Morning Post reported.
According to the report, this move has marked the company's ambition to diversify its wine products through another overseas investment. Earlier, the company had acquired a 60% stake in Weetabix, Britain's second-largest branded manufacturer of breakfast cereals and cereal bars. Bright Food currently has a liquor unit, Shanghai Jinfeng Wine, which is principally engaged in the manufacturing of yellow wine and sugar.
Bright Food's acquisition will help Diva to better understand the Chinese market and promote its expansion across sales channels, a Diva spokesman told the Reuters news agency. Diva sells vintage wines at various grades. In France, there are more than 20 vintage sales agencies similar to Diva. Diva's sales volume is the ninth largest in the country, a senior executive of the company said.
Reports of Chinese acquisitions of French wine manor houses are well published. According to Reuters statistics, there are 11,000 wine manor houses on the bank of the Garonne River in Bordeaux. Since 2008, Chinese investors have bought 15-20 wine manor houses and might buy another 30.
For Bright Food, buying a wine manor house is not enough to venture into the vintage industry. In Bordeaux, there are 8,000 registered small and medium sized wine manor houses.
An important motivation behind this Chinese foray is the sharp surge in consumption of Chinese vintage wines in recent years. In 2011, Chinese vintage consumption rose 110%. For instance, the largest French wine exporter in China, Castel Group, exported 30 million bottles of grade wine to China in 2011. In 2007, it exported only 2.6 million bottles.
As early as 2010, China had become the largest importer of Bordeaux grade wine. According to data, as of the end of 2011, French vintage accounted for 49% of China's vintage imports, a 74% year-on-year growth in exports.
In 2011, Shanghai Sugar Tobacco, a wholly-owned subsidiary of Bright Food, bought a 67% stake in Sichuan Quanxing Distillery for 240 million yuan (US$37.7 million), allowing the company to venture into the white spirit industry, sources reported.
In addition to Weetabix, the food company acquired a stake in a number of overseas companies over the past two years, including New Zealand's Synlait Milk and Australia's Manassen.