China Eyes Australian Wineries

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By Esther Tanquintic-Misa | April 2, 2013 5:09 PM EST

Hong Kong-listed China Foods Ltd, consumer food arm of Cofco, China's largest state-owned food conglomerate, is eyeing to purchase wineries located in Australia and the United States, in an acquisition that could be worth at least $20 million.

In a news conference in Beijing on Monday, Luan Xiuju, managing director of China Foods, said the planned acquisitions are expected to be completed within the next two years. The identities of the target acquisitions were not revealed.

"I've visited the wineries. Now everything depends on the progress of our talks with them," she said.

China Foods wants to champion the positioning and sell-off of locally produced wines in the domestic market, which had faced stiff and crippling competition from foreign imports.

China's wine market in 2012 continued to be dominated by France. Industry data showed that China's imports of Bordeaux wine alone reached 63 million liters from June 2011 to July 2012, thereby affecting the sales performance of China's domestic wine producers.

Wine sales of China Foods dropped 41 per cent from HK$46 million ($83 million) to HK$382 million during the period in review.

Another wine seller, Yantai Changyu Pioneer Wine Co Ltd, reported a drop in the sales performance of its top selling wines, leading overall profit for 2012 to plummet by 11.1 per cent.

"China's market is growing very fast but is still less familiar with the wine culture than Western countries. The most important thing right now is to bring wine into the households as well as to people's daily life," Ma Wenfeng, an analyst at Beijing Orient Agribusiness Consultant, told China Daily.

According to a report by Rabobank, China's wine imports had jumped over the last seven years, from 400 million liters in 2004 to 1,400 million litters in 2011.

China Foods has two overseas wineries, the Chateau Viaud in Bordeaux, France, and the Bisquert winery in Chile. 

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