Chinese Snap Up Bordeaux Vineyards

When passing by Chateau Laulan-Ducos it looks like any of the over 7,000 wine estates in Bordeaux, France’s best known wine-growing area. But when entering the wine domain, you’ll notice something different is taking place.

Chateau Laulan-Ducos, a picturesque 54-acre wine estate nestled on the remote tip of the haute Médoc region of Bordeaux, is owned by a Chinese businessman, and its complete wine production is shipped to China.

Richard Chen, the 42-year old owner of the Chinese high-end retail jewelry chain Tesiro, bought Chateau Laulan Ducos last year because he is a wine lover and keen to develop a market in China for the 150,000-bottle annual output of the Chateau.

Laulan Ducos’ bottles are now distributed at ‘Laulan French Wine’, a chain of 32 franchised wine shops set up by Mr Chen.

Although you wouldn’t directly associate China with French chateau-ownership, is it no longer an exception. In the past four years an estimated 30 chateaux in the world’s fine wine capital have been bought by Chinese businesses and investors, and an estimated 20 deals are in the pipeline.

Jane Anson, Bordeaux correspondent for wine magazine Decanter, speaks of an “avalanche of purchases.”

But China’s presence in the region does not come out of nowhere. The Asian tiger has recently overtaken the traditional strongholds of Germany and the U.K. as Bordeaux’s largest export destination for wine. Fifty-eight million Bordeaux bottles worth more than 300 million euros were exported to China in 2011 – a growth of 100 percent.

The Chinese associate Bordeaux wines with luxury and status, Eddie Yuan, of the Chinese Langfan Consulting group, which advises Chinese investors on French chateau purchases, told CNBC. And as French properties have become more affordable for China’s growing middle class, buying up a French chateau seems like the logical next step.

Although foreign ownership of French chateaux is nothing new and Bordeaux’s grand stone chateaux have attracted buyers from the U.S., Japan, Canada, and other developed countries for decades, the arrival of Chinese investors is different.

“The arrival of the Chinese has astonished the region because it has been very fast and aggressive. Chinese investments have been more extensive, more numerous and made within a short period of time,” Philippe Roudie, geography professor at the University of Bordeaux, told CNBC.

Anson told CNBC, the Chinese are changing the distribution of the wine production as they export the wine directly to China.

Grand Cru Love Affair

The first purchase of a French chateau by a Chinese investor was Chateau Latour Laguens and took place in 2008.

Chateau Latour Laguens is a 124-acre property in a small village about 30 miles (50 kilometers) south of Bordeaux in the Entre deux Mers region, one of the areas in the Bordeaux region most affected by a drop in land value from the region’s wine crisis in 2007-2008.

Although the chateau is far away from Bordeaux’s Haut-Médoc, home to internationally-recognized wines like Chateau Lafitte-Rothschild, Mouton-Rothschild and Chateau Latour, the estate’s name is similar to Bordeaux’s world famous Chateau Latour wine, something the Chinese like.

Another Chinese billionaire more recently bought Chateau Chenu-Lafitte, which, like Chateau Latour Laguens, is located in a lesser known wine-growing area — Côtes-de-Bourg — but holds a similar name to that of the world’s best known Grand Cru wine: chateau Lafitte-Rothschild.

Local Skepticism

The local population of Bordeaux is rather skeptical about the increasing presence of wealthy Chinese in the world-renowned wine region.

Although China’s growing importance as an export market for wine allows the region to compensate for the decreased wine consumption domestically, and Chinese investments are giving distressed wineries a much-needed boost, local inhabitants are slightly worried when they see how easily the land on which they have been producing wine for centuries is being sold.

“It doesn’t mean that because they’re clients, they can invade us,” Petra du Jardin, who works at a local hotel, told CNBC.

“Although they’re investing their money here and they’re not taking the properties with them to China, it’s a bit disturbing to see how they’ve so promptly started to intervene in our business,” Lois de Roquefeuille, a local chateau owner, told CNBC.

It remains unclear, however, if the Chinese will continue to expand their presence in the region at the same pace they’re doing now, or if their wine interest will be just part of a short boom that is about to temper.