We are agile. Our teamwork with our clients improves their business prospects and reduces business and legal risks.”
Kenneth Fukuda

"Time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future."
U.S. President John F. Kennedy



Chinese Investments in Napa Valley Wineries

Foreign ownership of Napa wineries has a long history. Many successful investors from Japan, England, France, Italy, Spain, Australia, Switzerland and Argentina have lengthy involvement in Napa Valley and other U.S. wineries.  

Wine consumption has been escalating in greater China.  As a result, Chinese businesses have been targeting Napa Valley, as one of the world’s finest wine growing regions.  Undoubtedly, purchases and ventures in Chinese interest in Napa wineries will proliferate as trade ties between the U.S. and China increase.

In addition to selling premium wines, U.S. wineries produce bulk wines for bottling in China by local wineries.  The bulk shipments are expanding because many of China's vineyards are unable to produce premium wines.  The quality of Chinese wines is improving in quality, however, additional experience and work is required.  

In Napa Valley, a variety of Chinese businesses have been exploring, acquiring and doing joint ventures with wineries with the objective of increasing exports of U.S. wines to China and Hong Kong.

At this time, wine consumption is relatively modest in China compared with western markets.  Studies have revealed that over the past several years, consumption of U.S. wines in China has quadrupled to 7 million liters.  That expansion has gained the attention of U.S. wineries, which in the past did not need to rely on exports due to high domestic demand.  Simultaneously, that growth has generated careful interest from Chinese investors and importers.

Chinese investors have consistently invested in U.S. natural resources and real estate.  With a view to taking advantage of U.S. business opportunities and diversifying their business, Chinese businesses have invested in the Napa Valley wine businesses recently.  That process will likely continue on an accelerated track.

For example, in mid 2010, Chinese investors, through Silenus International Group, acquired Napa Valley Silenus Vintners and an adjacent parcel of land for $6 million.  Silenus Vintners was created in 2006 after the purchase of Koves-Newlan Vineyards and Winery and focused on 20 high-quality boutique wines, producing 30 wines from prime Napa vineyards.  

The property is located in Napa Valley’s Oak Knoll District constituted a 7,000 square foot winery on a 10 acre parcel.  Facilities included a tasting room and ultra-modern equipment with related facilities.  The Silenus winery has been making high-quality wine for boutique producers.  The winery has a 30,000 case permit.

The majority Chinese investor in Silenus International Group hails from Henan Province in China.  Their Chinese wine company is also working on a winery project in Mainland China and intends to sell the Chinese wines, together with their premium Napa wines throughout China.

In 2011, the financial/investment entity known as Goldin Factoring, a factoring, restaurant and technology business, strengthened its focus in the wine industry by acquiring a prime 40-acre vineyard in Napa Valley, California.  In the transaction, Goldin also acquired three business trademarks relating to the Sloan brand from the Sloan Estate and the customer list for the sale of wines, subject to several trademark, future business and other restrictions by the Sloan Estate.  The Sloan brand has been rated highly by American wine critics, having received excellent ratings of over a period of several years.

By means of the acquisition, Goldin was successful in creating a business for the production, marketing and sale of wines without having to conceive a new brand.  Goldin acquired property of approximately 40 acres and improvements in Napa Valley, California from Sloan Family Winery, LLC.  The purchase included the property leases, the vineyard improvements and winery equipment and the rights to the 2011 grapes for $40 million ($10 million in cash).  Through the purchase, Goldin effectively established a strong presence in the wine industry and the opportunity for significant revenue and cash flow derived from the Napa Valley appeal.

The acquisition of these established brands increases the Chinese presence in the multi-national wine industry and will boost the prestige and the ability to generate revenue from the worldwide winery business.

Popularity of Wine in China and Hong Kong

Consumption of fine wines has improved impressively in Hong Kong and China.  The emerging Chinese middle class is a powerful factor in the accelerating wine demand in Asia.  Hong Kong has become a significant wine auction focal point because of the duty free wine policy passed in 2008 and the exploding demand from China.

To take advantage of the growth potential, Chinese businesses and investors are expanding rapidly in the wine business worldwide.  In past several years, growth in the wine business has been substantial.

Drinking imported wine has become a status symbol especially among the expanding middle class in China.  The demand for imported wine has been accelerating due to the passage of the duty free wine policy in Hong Kong and the burgeoning demand from China.  Hong Kong is transforming into one of the world’s most important wine auction centers.

Although American wine exports have stabilized in recent years, exports to China and Hong Kong continue to surge due to the increasing disposable incomes in China and the Chinese demand for branded premium wines.

California wineries make 90% of U.S. wine exports.  Other states, such as Washington, are following California’s lead.  For example, Ste. Michelle Wine Estates in Woodinville, Washington has exported wine to China for over a decade.

With the rapid development of China's economy and increased disposable income, the Chinese are learning the distinctions of wine.  Recently, China's wine industry received help from the government when it encouraged Chinese to drink alcohol derived from grapes, rather than grain which is preferred for food production.

China's consumption of American wines has more than quadrupled in the past five years. Chinese wine producers are importing an increasing amount of U.S. wines to mix with domestic brands.  Bulk imports from America to China have quadrupled within the past five years.

Chinese buyers are also targeting a variety of other large-scale and smaller international wine business opportunities.  For example, news reports indicated that Bright Food Group, which is a Shanghai-based food and dairy business, was in discussion about the prospect of a takeover of Treasury Wine Estates, the Foster's company that owns Penfolds, Beringer, Wolf Blass, Rosemount and other brands.  Treasury Wine Estates is the world's second largest wine company after Constellation Brands.  It has been reported that Fosters’ has suffered significant losses in its wine business due to the strong Australian dollar and slow conditions in the wine market.



Asia-Pacific Economic Cooperation
East Asia Summit
Asia's Wealth and Growth Engine
Chinese Investments in Napa Valley Wineries
China and Hong Kong Wine Business
China Business News
China, Japan & U.S. Foreign Investment Issues
International Investment & Immigration Opportunities
International Joint Ventures
Trademark Licensing and Royalties
Joint Ventures & Strategic Alliances
Purchasing a Business – Alternative Strategies

Selling a Business – Alternative Strategies