Bank of China provides loan to Kweichow Moutai to finance the acquisition of Château Loudenne

Project narrative

In May 2013, the Paris Branch of Bank of China (BOC) entered into a foreign currency loan agreement with Kweichow Moutai Co., Ltd. — a Chinese state-owned distiller, traded on the Shanghai Stock Exchange — to finance its acquisition of Château Loudenne — a winery in Saint-Yzans-de-Médoc (Cru Bourgeois Supérieur), France known for its red wines — from the Lafragette family for €20 million EUR. Kweichow Moutai entered into an agreement to acquire the 350-year 132-hectare winery in the Haut-Médoc AOC wine region near Boudreaux, which included a pink castle at the center from the 17th century, on April 29, 2013 for a consideration of €20 million EUR, with the sale closed shortly thereafter. As the first vineyard purchased by Kweichow Moutai, it was seen as part of its ambition to produce and import wings for China's growing wine market, with a goal to 50% of its wine back to the Chinese markets. Kweichow Moutai invested €5 million EUR to modernize the winery, with a conversion to organic produce completed in 2022, and another €2 million EUR in developing wine tourism. However, Château Loudenne under Kweichow Moutai ownership experienced issues. In 2015, three Chinese employees accused the winery for having unpaid back wages and illegally terminated contracts. Furthermore, the winery struggled to sell wines to China, with 10% of its sale going there. Moutai sold a minority stake to its partner cognac producer Camus, which it charged with making wine sales in travel retail and key export markets such as United States, Japan and Singapore. After major financial issues, on November 24, 2021, Bordeaux’s commercial court took over the winery and launched an auction due to long overdue unpaid employee wages and other expenses. The winery blamed constraints from the Chinese Government on its state-owned companies making planned investment plans for the winery infeasible. In March 2022, the Gouache family purchased Château Loudenne.