(Yicai Global) July 21 -- Chinese wine producer Xige Estate has secured hundreds of millions of yuan, equivalent to tens of millions of US dollars, in a Series A financing round.

Challenjers Venture Capital, set up by the founder of Chinese beverage maker Yuanqi Senlin, and Ningxia State-owned Assets Investment Holding Group took part in the fundraiser, Xige Estate said in a statement today.

The funding will be used to improve the supply chain, plant more and better grapes, advertise the company’s brand, and fund new media operations to move consumer taste toward Chinese wines, the company, headquartered in Ningxia Hui Autonomous Region, told Yicai Global.

The Chinese market for wine is huge and interest in China-made wines is growing, with more dealers changing focus to locally made labels from imports since last year, Xige Estate founder Zhang Yanzhi said. As China’s wine market and brands need time to develop, the investment in Xige Estate will bolster market confidence, he noted.

Founded in April 2017, Xige Estate owns more than 20 million square meters of vineyards that can produce about 10 million bottles a year.

China’s market for alcoholic beverages has been an area of focus for investors in recent years, but the wine industry has generally missed out with just 46 fundraisers since 2017. Most of the proceeds went to marketing channel operators, wine services providers, and wine traders, per data from corporate information platform Qichacha.

Apart from Xige Estate, only imported wine brand Torre Oria China and new label Wimo have completed financing rounds this year.

Sales of domestic wines have fallen for five straight years, dropping to CNY9 billion (USD1.3 billion) last year from CNY31.9 billion (USD4.7 billion) in 2017. But producers above a designated size reported CNY330 million (USD48.8 million) in 2021 profits, up 7.6 percent annually, according to the China Alcoholic Drinks Association. Loss-making firms were in deficit to the tune of CNY290 million, a 29 percent decline.

Editor: Futura Costaglione