Chinese wine leader to boost output

By Dominique Patton

- Last updated on GMT

Related tags Winemaking

Dynasty Fine Wine Group, one of China's top three wine makers, is
set to increase its production capacity to 50,000 tons this year,
to meet fast-rising demand for the drink in an increasingly
affluent population.

Deputy general manager Liu Jicheng told​ that the expansion at its Tianjin plant will cost HK$200 million (€20.6m) and is expected to be completed by June.

The wine maker, 26.7 per cent owned by French group Remy Cointreau, currently produces 30,000 tons of wine annually. An IPO launched in January last year raised the funds to boost capacity.

Liu said a second stage is planned to increase output a further 20,000 tons by the end of 2008, which may be at a new facility in a second location.

The company is also on the lookout for acquisitions. But it is not the only wine maker rallying to provide for a growing number of wine drinkers in China.

In January, COFCO, one of the divisions of China's largest grain trader China National Cereals, Oils and Foodstuff Corp, said it would set up a RMB100-million joint venture winery in Shandong to make wine for more discerning consumers to add to its Great Wall wine at the lower end of the market.

"This sector is a relatively high-margin one, with gross margins of about 50 per cent,"​ said Liu. "Naturally this will attract investors from both China and overseas."

He added that the top three companies - Dynasty, Changyu and Great Wall, which together produce more than half of all China-made wine - are all selling well. The rest of the market is highly fragmented with around 500 local players.

"At the moment we don't see any overcapacity. We are expecting strong growth to continue,"​ he said.

A report released this week said that China's wine industry made profits of RMB1.256 billion (€130m) last year, up 58.68 per cent over 2004.

This is higher than the growth in the spirits sector (25.69 per cent) and the beer industry (24.99 per cent), according to the National Information Center.

Dynasty reported a turnover of RMB850 million in 2004, up 20.4 per cent on the prior year.

Related topics Markets Beer, Wine, Spirits, Cider

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