China nouveau riche get taste of fine wine investing

By Samuel Shen

SHANGHAI (Reuters Life!) - Well-heeled Chinese can now invest in fine wines via the mainland's first "wine futures", but the vintages on offer are from aspiring local vineyards rather than rare Bordeaux labels.

Industrial and Commercial Bank of China and CITIC Bank, two of the country's biggest, have recently launched separate investment trusts aiming to raise about 100 million yuan ($15 million) each from the sale of wine from the coastal Shandong province "en primeur", or while it is still in the barrel.

The system, usually reserved for hard-to-find wines from famed regions such as Bordeaux or the Rhone Valley, tickled the palate of Chinese bankers seeking to tap two trends in China's fast-growing economy: an interest in fine wines among increasingly affluent consumers, and rising ambitions among the country's wineries to join the ranks of fine wine producers.

The futures also offer a steadier alternative to the tumbling stock market, analysts said.

Wine futures are already offered by merchants and investment funds through private banks in Hong Kong, but these tend to be for internationally renowned labels.

"Chinese consumers are richer and have become more picky about the quality of wine, so the value in good wine will keep rising," said Wang Yiguo, food industry analyst at China Jianyin Investment Securities.

"Luxury wine, like art, is a good investment, especially when the financial markets are in turmoil."

The trusts allow investors to purchase wines produced by Chateau Junding, owned by China's biggest grain trader, COFCO, from grapes harvested in 2006.