Here's the full article:
LVMH soaks up Wenjun stake
By Mure Dickie in Beijing and Adam Jones in Paris
Published: May 17 2007 01:18 | Last updated: May 17 2007 01:18
Not content with exporting Dom Pérignon champagne, Hennessy cognac and Glenmorangie whisky to China’s elite, France’s
LVMH has taken a majority stake in
Wenjun, a Chinese distillery.
Its decision to buy 55 per cent of the business for an undisclosed sum highlights the desire of international drinks groups to win a foothold in the fast-growing market for Chinese clear grain spirits, known as
baijiu or “white alcohol”.
Diageo, the British drinks group that owns Johnnie Walker whisky and Smirnoff vodka, said in January it was taking a stake in a leading maker of
baijiu.
Christophe Navarre, chairman of
LVMH’s wine and spirits arm, described the company’s investment as an “important strategic move”. Jiannanchun, the distillery’s current owner, will keep a 45 per cent stake.
LVMH said it would share its luxury branding expertise with its Chinese partner.
Though much of the
baijiu sold in China is still cut-price firewater, the industry’s profits have soared in recent years as newly affluent urban drinkers focus more on premium brands.
Wenjun was formed in the Sichuan city of Qionglai in 1950 through a government-ordered reorganisation of privately owned local stills.
Wenjun came under the control of Jiannanchun, one of China’s biggest drinks groups, in 2001.
Company officials declined to comment on Wednesday but local media have said
Wenjun produces 30,000 tonnes of alcohol a year for sale under more than 100 of its own brands as well as a further 2,800 tonnes of raw alcohol sold to other drinks companies.
Copyright The Financial Times Limited 2007
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