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No. 10 - LVMH chief executive Bernard Arnault. Net worth- $29-billion (GONZALO FUENTES/Reuters)

No. 10 - LVMH chief executive Bernard Arnault. Net worth- $29-billion

(GONZALO FUENTES/Reuters)

Moët gears up to produce Chinese bubbly Add to ...

Champagne production is confined to 80,000 acres of French terroir about 160 kilometres east of Paris, but Moët Hennessy will soon be producing upmarket bubbly from a new winery in north-west China.

Moët, which owns historic champagne brands Dom Pérignon, Veuve Cliquot and Krug, has joined forces with a Chinese state-owned agricultural group to develop a sparkling wine in the remote Ningxia Hui region.

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The wine will not be sold as champagne - a moniker that is still reserved for wines from the eponymous region - but it will aim to satiate Asia's booming demand for bubbly.

Just south of Inner Mongolia and 900 kilometres west of Beijing, Ningxia's climatic conditions are not far removed from those of Champagne, with the Yellow River substituting for the placid Marne.

The joint venture will include 163 acres of land holdings, with Moët - part of Bernard Arnault's LVMH Moët Hennessy Louis Vuitton SA luxury empire - in control of a new winery on site.

No financial details were disclosed.

The end product will be sold under the Chandon label, a secondary brand which currently markets wines from non-French domains in California, Brazil, Argentina and Australia.

China has become a buoyant market for top-end alcohol brands, overtaking the U.K. as the top export market for Bordeaux wines in value for the first time in 2010, according to France's Conceal Interprofessionnel du Vin de Bordeaux.

Between 2005 and 2009, wine consumption in China more than doubled to 867 million litres, equivalent to over one billion bottles, claims Vinexpo, a wine exhibition group.

The increase in drinking has been echoed by an increasing interest in production.

International vintners have been driven to try growing grapes in more exotic locales, including China, India and Mongolia.

As well as affordable land - a fraction of the price of established domains in Europe - they are attracted by the burgeoning appetite for wine in emerging markets, in contrast to steadily falling sales in developed countries.

In 2009, Château Lafite-Rothschild, one of winemaking's most august names, partnered with CITIC, China's largest state-owned investment company, on a 60-acre project on China's eastern coast.

France's Pernod Ricard group already grows in the Ningxia region which Moët is now targeting.

It is not LVMH's first foray into Chinese drinks production.

In 2007, it bought a 55 per cent stake in Wenjun, a brand of baiju - a clear grain spirit popular in China - in an attempt to transform the image of the drink away from cut-price firewater to a luxury brand.

 

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