Club Med Investor Fosun in Talks to Buy Stakes in European Luxury Brands

Fosun International Ltd., part owner of Club Mediterranee SA, plans investments in European luxury brands and red wine companies to build alliances for expansion in China, which is forecast to become the biggest luxury market.

“Many European companies have approached us and we are in talks,” said Qian Jiannong, who manages investment decisions at Fosun’s parent, Fosun Group. The company may seek partners in countries including France, Italy, Germany, Spain and Greece with “strong branding and influence” in clothing and wine, he said in an interview today

Fosun, which bought a 7.1 percent stake in French resorts operator Club Med in June, is increasing consumer investments as China domestic consumption rises. The world’s fastest-growing major economy will probably be the world’s largest market for luxury goods in five years, according to the Chinese Academy of Social Sciences.

“The outlook for red wine companies is rosy,” Qian said. “Chinese consumption patterns for alcohol have been changing. Chinese white liquor was used to be popular, then beer was the next. Now red wine is becoming very trendy among Chinese.”

Fosun declined 1.7 percent to HK$5.93 in Hong Kong trading. The stock has gained 9.4 percent this year compared with a 3.6 decline in the wider Hang Seng Composite Index.

Chateau Lafite

Fosun estimates red wine sales will rise by more than 20 percent every year in China, Qian said.

Fine Bordeaux red wine prices in China rose 30 percent from a year earlier, while Chateau Lafite Rothschild increased 37 percent, according to a report from Hurun, a Chinese luxury publishing and events group.

China overtook the U.S. as the second-biggest luxury market last year, after Japan, with sales of $9.4 billion or 27.5 percent of the global share, according to the Chinese Academy of Social Sciences. Sales of luxury goods in China, the world’s most populous nation, will reach $14.6 billion by 2015, it said.

“We will help our partners expand stores in China, giving them advice on management and employee cultural issues, as well as the selection of property locations,” Qian said.

He didn’t give specific investment targets as talks haven’t been completed.

Fosun plans to raise its holding in Club Med to 10 percent and open attractions in China with the Paris-based resort operator. It’s looking at locations including Hainan Island in southern China, suburban Shanghai and other cities in the eastern part of the country, Qian said.

Revenue from Fosun International’s steel business, which accounted for more than 70 percent of the company’s sales last year, fell to 24.6 billion yuan ($3.6 billion) in 2009 from 30.9 billion yuan in 2008, according to its annual report. Sales declined 13 percent to 34.9 billion yuan last year.

To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net.

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email