Moet Hennessy has agreed on a joint venture with Ningxia-based SOE Nongken to produce high-end sparkling wines in the province. Production will commence in 2014 from a 67 hectare vineyard in the Helanshan District.

Nongken already has 670 hectares under cultivation with an annual wine production capacity of 30,000 tons. The company also has a joint venture with Carlsberg in the area and is also involved in Halal meat production (Ningxia is mostly Muslim) and other agricultural ventures.

For Moet Hennessy, the joint venture adds another arm to its success in China, which is already the number one consumer globally of its cognac. In total, Moet Hennessy enjoyed double digit growth in sales from China in 2010.

Wine consumption in China has increased rapidly over the past decade to reach 1.05 billion liters in 2010, and the market is set to grow by 13 percent to 18 percent annually over the next five years according to industry analysts. Per capita wine consumption in China last year was 0.8 liters compared to France where it is 56 liters. The sparkling wine will be made in traditional methode champenoise European standards, and will be aimed as a luxury, high end product.

"Moet Hennessy's JV in Ningxia is a great strategic move. They have already had considerable experience in India, where a JV there now produces a very fine sparkling wine, and with their technical expertise the venture in Ningxia will both help put the province on the foreign investment map and provide a product I am sure many in China will want to try," stated Chris Devonshire-Ellis, principal of Dezan Shira & Associates.