The Chinese government has approved the first-ever Chinese investment fund specialising in wine.
Dinghong: will also buy en primeur
The Dinghong Fund (Dinghong means ‘In Red’) plans to invest in €110m on wine over a five-year period starting this year, according to a representative from Bordeaux negociant Vintex & les Vignobles Grégoire, which will manage the fund’s wine buying.
Wine purchasing will be spread out over a five-year period, with about €22m invested per year.
‘One challenge will be to temper Chinese investors who think that €22m to start with is too small an amount, but we have explained that it is better to spread out spending to reduce risk,’ said Philippe Larché of Vintex.
Wines purchased will be primarily red Bordeaux and some Burgundy: 60% already on the market and the remaining 40% invested in en primeur, Larché told Decanter.com.
Chinese government approval was mainly needed for en primeur purchasing because futures buying is not common in mainland China. ‘Most Chinese companies that buy futures do so in Hong Kong or elsewhere,’ he said.
The fund was founded by Ling Zhijun, a banking professional and wine enthusiast who manages Pacific Asset Management of Beijing.
Larché will be the fund’s primary advisor and main supplier, he said. ‘I will also manage on-site all the logistics and traceability of wine, crucial to investor confidence,’ Larché added.
The minimum investment is €1m for a company and €100,000 for an individual. ‘Many investors are already in the wine business, but by way of this fund, they will obtain a form of security for their purchases, attained by a grouping of purchases via an “official” fund,’ Larché said.
There is also an educational role to the fund. ‘We expect to bring each investor to discover the vineyards of Bordeaux, and to set up wine masterclasses in China, with the participation of owners and winemakers,’ Larché said.
‘Over one-third of wines to be purchased will supply the cellars of these investors, so the fund is not just about buying and selling grands crus, but also educating customers and introducing them to Bordeaux.’
The Dinghong Fund is not the only new venture to encourage Chinese wine buying.
Earlier this year, the Shanghai government established the country’s first official wine exchange – an internet platform to connect investors with approved suppliers.
Written by Panos Kakaviatos