Chinese-owned vineyards in France for sale at knockdown prices

Paris: Just a few years ago, Chateau Latour-Laguens was the multimillion-euro flagship in a brave-new era of Chinese-owned wine making.

Now, the winery almost 50 kilometres south-east of Bordeaux is abandoned, decaying, and back on the market for a fraction of its value.

It is just one of dozens of Chinese-owned vineyards up for sale at knockdown rates as China loses its taste for imported wine – and the dream of cashing in big turns sour for scores of Beijing and Shanghai-based investors.

Elodie (left), manager of Chateau Latour-Laguens, in Bordeaux, France, with the plans for the property in 2013.Credit: Getty Images

There’s a combination of factors driving the sell-off. A crackdown on corruption at home has weakened demand for expensive gifts, and tighter capital controls make it more difficult for Chinese to spend money abroad.

In May, France also confiscated nine chateaux in Bordeaux worth about €35.5 million ($58 million) from a Chinese tycoon who was convicted of money laundering and embezzlement of Chinese public funds.

Above all, there is a belated realisation that many customers simply don’t like the wine. Heavy, tannin-rich reds, it turns out, just do not fit in at the Chinese dinner table.

It’s a dramatic turn from the early 2010s, when Li Lijuan, a Chinese estate agent of Vineyards-Bordeaux, was fielding four to five queries a day from wealthy Chinese investors keen on getting in on the Bordeaux wine rush.

The flavour profile of French wines has not suited the Chinese market. Credit: iStock

“I have a dossier that I keep and I counted about 300 potential Chinese buyers who wanted to buy a domain since I started working in 2013,” said Li.

At the time, China was one of the most exciting and fastest growing wine markets in the world. Alongside explosive demand for French luxury brands – Dior, Hermes, Louis Vuitton – prestigious bottles of Bordeaux had become the latest status maker for China’s wealthy elite, who offered them as luxury gifts and displayed them in their homes like trophies.

Bordeaux’s wine-growing region has long been accustomed to foreign ownership, but the rush of Chinese investors was remarkable: they snapped up about 200 vineyards within just a few years to meet what promised to be an unquenchable demand for French wine back home.

Fast-forward a decade, and many of the properties are now listed for a fraction of their purchase price.

Chateau Latour-Laguens, in the wine-growing region of Entre-Deux-Mers, made headlines as one of the first vineyards to be bought when it was acquired by Chinese real estate firm Longhai Investment Group in 2008.

Though the original sale price was not officially disclosed, Le Figaro reported that the buyers paid €2 million for the entire lot at the time. It is now back on the auction block by judicial order for €150,000, without the vines.

It wasn’t supposed to go this way.

Between 2007 and 2011, wine consumption in China soared by 142 per cent. By the end of 2013, China and Hong Kong had overtaken France and Italy to become the world’s largest consumer of red wine, with a particular penchant for Bordeaux.

Bottles of wine are displayed at one of the world’s biggest wine fair, Vinexpo, in Bordeaux, south-western France, in 2015. Credit: AP

Chinese investors keen to seize a new business opportunity bought up vineyards and gave them new names like Imperial Rabbit or Gold Rabbit.

The wines were destined for consumers back in China with outrageous profit margins: bottles of red wine that would normally sell for €3 or €4 in France were being marked up to €20 to €30.

But the excitement was premature.

China’s wine consumption peaked in 2012. In 2013, almost as soon as many Chinese millionaires signed ownership papers, President Xi Jinping, launched an austerity drive cracking down on lavish, ostentatious public spending.

The move followed a string of corruption scandals that often involved expensive gifts or bribery in the form of a luxury handbag – or a prestigious bottle of red wine.

A few years later, in 2017, Beijing introduced new capital controls that tightened the transfer of money outside China, dealing another blow to investors.

“It was catastrophic for business,” Li said.

The UNESCO World Heritage town of Saint-Emilion in south-west France. In the early 2010s, wealthy Chinese investors were keen to get in on the Bordeaux wine rush.Credit: iStock

After peaking in around 2012, China’s wine consumption has been falling steadily, averaging a loss of 2 million hectolitres a year since 2018, according to the International Organisation of Vine and Wine.

In 2023, amid an ever-shrinking economy, the country’s wine consumption plummeted 25 per cent compared to the year before.

It’s a trend that Jerome Baudouin, editor-in-chief of the wine magazine La Revue du Vin, had predicted a long time ago.

For one thing, wine cannot stand up to the traditional Chinese meal, in which savoury and sweet – fish, meat and vegetable dishes are often presented at the centre of the table at the same time, he points out.

This could explain a major discrepancy between wine sales and actual wine consumption in China: bottles are collected for show, he said, but not actually consumed.

“For me, it was a mirage. People were wrong on both sides,” he said. “Producers in Bordeaux thought a new market was opening up for them, like the US and UK and that this would last. It was the same for the Chinese who came over to Bordeaux. They thought it would be easy to make wine and that it would make them a lot of money.”

Stuck in the middle were the workers in the vineyards and on the estates, many of whom complained of absentee owners, clashing work cultures, and, in the worst-case scenario, no pay.

For nearly five months, Helene Pauly and her five colleagues went without pay from their Chinese bosses at Chateau de Pic in 2020. Pauly, the estate’s administrative manager, had to dip into her savings and request overdraft protection.

Her other colleagues had to get a loan from the bank and were forced to use food banks. She led a battle against her employer, Xu Min, that ended with the Bordeaux tribunal siding with employees and ordering back pay.

“There was never any sincerity or honesty in their explanations, and it was like this all the time,” Pauly told The Telegraph.

She described a stressful environment in which her work was micromanaged from China, and employers with little understanding of the inner workings of a vineyard making unreasonable demands, such as harvesting in June instead of September.

At the lowest point, Pauly began to worry for her safety.

“I didn’t know how far they could go… they knew my address, my habits, they could easily have done something to send me a message.”

The experience was exhausting and pushed her into early retirement.

‘There are Chinese owners who just disappear’

Corinne Lantheaume, a union rep for the local CFDT Gironde who helped Pauly’s case, points out that the biggest obstacle is trying to deal with absentee owners.

“There are Chinese owners who just completely disappear,” she said. “Our problem every time is that when there is an issue at some point, in France we don’t know who to contact because everything is in China. If we do succeed, it’s because the new owner who buys the property pays the back salary on their behalf.”

Another trend among Chinese employers is a mistrust of their French workers, Lantheaume said. So they hire Chinese employees with little to no experience working in the vineyards or in the wine industry.

“There’s a great mistrust of French employees. And it becomes complicated when you don’t trust people who know the work.”

Lantheaume is quick to point out, however, that one of the region’s most exemplary employers is Peter Kwok, a Hong Kong businessman who owns Maison Vignobles K and is well respected among his staff and fellow winemakers. And there is no shortage of labour disputes at French-owned chateaux.

Meanwhile, Li says that distrust, earned or not, can work both ways. She recounts how she once witnessed a Chinese employer pay his workers in cash to bypass the problem of blocked funds. But to her dismay, the lack of paper trail allowed the couple to take their employer to court falsely claiming that they hadn’t been paid.

In recent weeks, Li says news of Chinese investors trying to offload their chateaux has drawn interest from a new emerging market: affluent Chinese who live outside China in Malaysia, Singapore, and Thailand.

“At this moment, I’m getting about four to five people contacting me every week.”

The Telegraph, London

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