By Andy Young
One of China’s largest winemakers, Weilong Grape Wine Company, has spent $13.4m buying Australian vineyards and plans further investment in Australian wine.
The company has recently raised $120m through a share placement and has said that it plans to invest the money in Australia. The vineyard purchases represent some of that investment, with more to come through the building of a wine-making facility in Mildura.
In a statement to the Shanghai Stock Exchange, Weilong said that it has agreed to purchase 1235.3 hectares of Australian vineyards in for a total of $13.4m. The company also plans to build a winemaking facility in Mildura, which will be developed by its Australian subsidiary Veyron Wine Australia.
The Midlura facility will have the capacity to process 60,000 tonnes of “high-quality Australian wine grapes” each year. The further investment of that $120m will see Veryon construct the workshop, purchase and install the press-related equipment and auxiliary facilities including fermentation tanks, storage tanks and other winemaking equipment.
The company cited the reduced cost of producing and processing its own grapes in Australia versus buying them as one of the reasons behind the purchase. As well it said that the Australia-China Free Trade Agreement (FTA) was a reason for making the investment. The FTA will see the tariffs on Australian wine bottled exported to China reduce from 14 per cent to zero and on bulk wine reduce from 20 per cent to zero by 2019.
Weilong said that all the wine it produces will be sent to China, adding “this new plant will satisfy demand from Chinese consumers for higher quality wines”.