China’s expanding taste for wine drives Carlyle’s latest deal

After the UK, China is the world’s second largest wine market and is believed to be on course to overtake the UK by 2020. Yesterday saw the Carlyle Group announce that they are acquiring Accolade Wines for $770m from Australian PE firm, CHAMP Private Equity, who acquired the business for a reported $287m just over seven years ago. Accolade Wines is Australia’s second largest wine producer after Treasury Wines and is the producer of brands such as Hardys’ and Banrock Station and like others has seen tremendous growth in its exports to mainland China as Chinese wine consumption continues to grow.

The Australian wine industry has benefitted from a free trade agreement established in 2015 which saw China reduce import tariffs on Australian wine from 20 per cent to around 3 per cent, with Australia second only to France in terms of the amount imported and sold in the country. The potentially escalating trade war between China and the US would surely only hurt US wine imports and increase demand for wines from other counties, including Australia, as the increasing affluent Chinese middle class expand their international tastes.