The Chinese wine-making operation jointly established by Japan's Asahi Breweries Ltd. (TSE:2502), Marubeni Corp. (TSE:8002) and a local brewery began production Wednesday.

The joint venture in the Jiangsu Province city of Nantong imports raw ingredients from South America, Europe and Australia and makes wines that suit the Chinese palate. It also imports wines produced in Italy and France under outsourcing contracts.

Asahi Breweries is the first major Japanese beverage maker to produce wines in China.

The Jiangsu firm is owned 30 per cent by Asahi Breweries, 30 per cent by Marubeni and 40 per cent by Dafuhao Beer Co. Marubeni imports the ingredients, Asahi Breweries make the wines and the Chinese partner handles marketing and sales.

While imported wines cost the equivalent of 1,700 yen (US$18.70) to 2,100 yen (US$23) per bottle, low-priced line-ups will be sold for 350-700 yen a pop. The factory aims to produce 2,000kl of wines in the first year, but production is expected to eventually be expanded to 10,000kl.

China consumed about 340,000kl of wine in 2001, but the figure has been growing 10-15 per cent a year and is projected to reach 600,000kl in 2010, according to Asahi Breweries.