Legend steps towards building wine empire

Legend Holdings' wine subsidiary Fenglian Wine has fully bought out well-known Chinese liquor brand Hunan WuLing Wine Co with a share acquisition costing more than 400 million yuan ($63.6 million), according to China Business News.

Legend Holdings, personal-computer giant Lenovo's parent company, bought 39 percent of WuLing Wine's stock and became the largest shareholder in June 2011. The latest share acquisition makes Legend Holdings full owner of Hunan WuLing Wine Co.

So far, Legend Holdings has taken full ownership of Shandong Kongfujia, Hebei Bancheng Wine and WuLing Wine, hoping to make its subsidiary Fenglian Wine "China's leading wine group".

"We had a very clear plan when we started the wine business,” Fenglian Wine's chairman Zhao Linghuan told China Business News. Legend Holdings has been expanding its wine business for two years and has become established as an integral part of the company's consumption and modern services sector.

Under Fenglian's management, WuLing Wine's shipments grew 60 percent in the first half of 2012, compared to the same period last year. The company also launched a project to build the largest wine sauce production base in China this year.

Experts have cast doubt on Fenglian's strategy, as the wine companies that Fenglian acquired were mostly second- and third-tier brands.

"We have a long-term plan, and the potential of the wine companies is what we value the most," Fenglian's president Lu Tong told China Business News.

"A good brand is not determined by size. Some liquor brands that have sales in excess of ten billion yuan were small enterprises a decade ago."