Israeli company to build US$8 million winery in China

Chinese consumers’ thirst for wines has attracted an unlikely investment from an Israeli winery that is looking to build an US$8 million winery in China’s Hubei province.

Israel’s Hayotzer Winery, owned by the country’s fifth largest winery, Arza, is reportedly in talks with the Chinese company, Peng Dun Group, to build a joint winery near the province’s Jingmen city in central China, and advise on the winemaking and viticulture of the joint venture, the Hebrew language newspaper TheMarker reported.

Under the terms of the agreement, Hayotzer will own a 20%-25% stake in the venture, which is expected to dramatically increase its current annual production from 300,000 bottles to one million in the first year of production, Guy Edri, Hayotzer’s CEO, told the newspaper.

China, currently the world’s forth biggest wine consumer, is expected to surpass France and the UK by 2020 to become the world’s second largest wine market by value after the US.

Domestic wines still dominate the market with around 30% coming from imported wines with France, Australia and Chile leading the country’s bottled wine imports.

Israel, an ancient winemaking country, only exported a meagre US$570,000 worth of wines to China last year, representing 1.4% of its total exports, down by more than a third from 2015.

The two apparently started talks last year after they made contact at an international wine exhibition in China where the Chinese company placed an export order for 40,000 bottles.

The joint winery will take about two years to complete once it’s received all the regulatory approvals.

Known for its kosher wines for kiddush and sacramental purposes, Arza produces about five million bottles a year.