Vintner Changyu expands with foreign partners

YANTAI: When Zhang Bishi, an overseas Chinese living in Malaysia, founded Changyu in 1892, it was not likely that even he dreamed that 116 years later Changyu Wine Group Co Ltd would be a producer of international wines.

"Changyu is marching into the global market, and it is getting stronger through cooperation with leading international wine producers," said Sun Liqiang, president of the company.

Its 120,000-mu (8,000 hectares) vineyard makes Changyu the largest wine producer in Asia.

The company had more than 30 percent of the domestic market in 2007, and its profit accounted for 47 percent of the total in China's wine industry.

The company became one of the world's top-10 wine producers last year, with 5 billion yuan in sales revenue and exports of more than 300,000 bottles of wine.

Statistics from China Alcoholic Drinks Industry Association show that only three companies - Changyu, Great Wall and Dynasty - sell 85 percent of the wine in China.

Annual wine consumption from 2008 to 2011 in China is projected to surge more than 70 percent, making it the eighth-largest wine consuming country in the world.

Average wine consumption globally has been increasing by about 1 percent in recent years. In Asia growth is nearly 8 percent.

Changyu has been increasing its efforts to attract international capital and cooperate with the world's leading wine producers to catch the trend and accelerate its growth.

The company joined with French vintner Casteland in 2002 to jointly produce China's first international chateau wine, Changyu Castel Chateau.

Illva Saronno Investments S.r.l and US International Finance Corp respectively took 33 percent and 10 percent of Changyu's equities as strategic investors in 2005.

Changyu worked with the Organization International de la Vigne et du Vin in 2006 to attract capital from five countries - Italy, the US, France, Portugal and China - to found the Chateau Changyu AFIP Global Beijing last June. It combines tours, holidays and wine knowledge to a niche consumer group such as high-ranking governmental and business people.

In a joint effort with Canada's Aurora Company, Chateau Changyu Icewine - icewine is made of grapes which are frozen naturally under minus 8 C in winter - was established in northeast China's Liaoning province in 2006.

The year also witnessed the introduction of the new vintage Chateau Changyu Kely in New Zealand, co-founded by Changyu and New Zealand Karikari Estate.

The extensive cooperation with foreign partners has boosted the development of the company's globalized management system.

The company exported more than 300,000 bottles of wine to 14 European nations through Germany in 2007. Changyu's wine was provided in the first-class staterooms onboard German airline Lufthansa last year.

The first Chinese brand in the European market, Changyu's wine is now on the shelves of more than 3,000 supermarkets in Germany, Austria, Poland, Britain and Norway, said Sun. Its exports are priced in a broad range from 8 euros ($12.27) to 30 euros ($46).

Sun noted that the company began what it terms a "4+1" strategy from 2007 to develop the four joint-venture chateaus and one premier vintage-Cabernet - in a bid to establish a premier wine and create a unique brand image.

The sales of more expensive wines and icewine are contributing 40 percent to the company's increase in revenue.

Revenues from Changyu's medium and high-end products have soared from 33 percent to 66 percent.

Changyu is also leading the Chinese market in development of en primeur - a French term for wine "futures" sold before bottling.

The world's biggest icewine production center in Liaoning province can provide 1,000 tons of first-class icewine to international customers every year.

Changyu Kely Chateau in New Zealand mainly provides high-end products to domestic and overseas golf clubs.

Changyu now has plans for big investment to develop a world-class production center for Cabernet, as well as a state-of-the-art beverage-packaging production line, with a 30,000-ton annual output.

Cabernet generates the largest profits for the company through annual compound growth of 44 percent from 2003 to 2007.

Changyu (Yantai) Pioneer Wine Co Ltd has set a goal to become China's biggest wine agent for foreign vintages by importing leading international brands.

The company is also staying abreast of industry developments by cooperating with foreign partners on products, technology and human resources.

Since Changyu Cognac brandy won first prize at the World Exposition held in San Francisco in 1951, Changyu has been honored with many prizes and titles domestically and overseas.

(China Daily 03/12/2008 page15)