Company set to spend $29.5m on second overseas move after buying French cognac producer in 2013
Yantai Changyu Pioneer Wine Company Ltd, a leading winery based in Xinjiang Uygur autonomous region, is planning to take a 75 percent stake in the Spanish wine maker Dicot Partners SL, which officials said will help the Chinese firm globalize its brand portfolio.
The company is set to spend a total 26.25 million euros ($29.5 million) on the acquisition.
The stake is being bought from Spanish firms ComercialGatar and Gestion Ganuza, both of which will be left with equal shares of the remaining 25 percent of the business.
Dicot Partners is considered among the top five Spanish wine producers. It has annual capacity of 16,000 metric tons, spread across seven wine brands. Over half of its revenue is from exports, just 1 percent of which is sold in China.
Sun Jian, Changyu's deputy general manager, said the takeover - based in Rioja, the heart of one of Spain's leading grape growing regions - is part of the company's efforts to grow its international sales.
Dicot Partners becomes Changyu's second international acquisition, after it bought French cognac and brandy producer Roullet-Fransac in 2013.
Sun said Spain is China's third-largest source of imported wines, after France and Australia, "but in terms of value, Spain has become the most competitive".
He said Changyu is already looking at other international acquisition targets in major grape-growing markets.
Changyu had a strong first half year, despite the government's anti-austerity campaign which has hurt other alcoholic drinks companies.
Its revenues rose 22.75 percent to 2.8 billion yuan ($438.4 million), which delivered a net profit of 740 million yuan, a 17 percent rise.
According to Qilu Securities, Chinese wine imports increased 13.4 percent in the first six months of this year by volume, but prices fell on average by 11.1 percent.
Sun said Changyu imported 100 million yuan of wine last year, which represented 2 percent of its business, but it is aiming to increase that to 30 percent of total revenue.
Li Xinxin, chief executive officer of Chateaux Haut-vallee, a wine trading company based in Beijing, said the acquisition would "upgrade Changyu's technology knowhow, lift its production capacity and diversify its brand portfolio".
Li also expects more Chinese wine makers to look abroad to acquire international brands.
