Chinese infusion rescues Aussie winery

The Ferngrove winery by the Frankland River.
• From Bloomberg News Service

Ferngrove winery, which grows Shiraz, Cabernet Sauvignon and Semillon grapes in Western Australia’s Frankland River, last year faced declining sales and the prospect of breakup if business didn’t recover.

As it sought partners, a Chinese investor visited last October and bought 14,000 bottles of wine to test on friends and associates back home, said Ferngrove Managing Director Anthony Wilkes. They liked what they tasted. In February, the winery received a $1 million investment from the investor’s private firm, which has since increased to $10 million, giving it about 60% of the winery, Wilkes said.

“If they hadn’t come in, the business would potentially have been sold, or parts of it been divested,” Wilkes said. “At the end of the day, we looked at what the alternatives were and this was definitely the best outcome.”

Australian vineyards such as Ferngrove, facing a wine glut, slumping exports and rising competition from countries including Chile and Argentina, are turning to China for salvation. Chinese buyers are proving receptive as they seek to meet surging demand among the nation’s rich, who are developing a taste for grape wine and the expression of wealth it conveys.

Vineyard values have lost as much as 50% since 2008 across Australia’s 60 wine-producing regions -- including the Barossa Valley and McLaren Vale in South Australia known for their Shiraz; the cooler Yarra Valley in Victoria, famous for its fruity Chardonnays; and Western Australia’s Margaret River, renowned for its Cabernets -- according to Toby Langley, director of Adelaide-based winery broker Gaetjens Langley.

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