French luxury brand Moet Hennessy sees China as its largest market in terms of revenue this year. [Photo/China Daily]

Moet Hennessy, the wine and spirits division of the French luxury group LVMH, has launched a new winery in Deqin county, in Yunnan province, and officials said the company is planning to boost its presence further in China.

"China is expected to stay as our largest market this year, especially from a revenue viewpoint," said Mark Bedingham, its managing director in Asia Pacific, who added the country overtook the US last year as its largest global market, without revealing any figures.

The French group's total wine revenue jumped 17 percent in 2012 from a year earlier to 4.1 billion euros ($5.3 billion), while profits increased by 14 percent to 1.26 billion euros.

While launching the Deqin facility, its third in the country, Bedingham said the area is well-known for its breathtaking natural landscape, often referred to as "The real Shangri-La", after a fictional monastery described in James Hilton's 1933 novel Lost Horizon.

The Deqin winery - covering 30 hectares at about 2,400 meters above sea level - is a joint project with VATS Group Ltd, a local Chinese wine and liquor business, 66.7 percent-owned by the French drinks giant.

Sources from the Chinese company said total investment in the winery was 120 million yuan ($19.5 million) but the French side declined to reveal the exact figure.

"We want to learn their grape cultivation techniques as well as winery management expertise," said a spokesman for VATS Group.

A statement from Moet Hennessy added the winery is designed to the highest international standards and expects to produce "the best-quality red wine in China".

Moet Hennessy plans to first plant Cabernet Sauvignon, Merlot and Cabernet Franc grapes in the vineyard. Petit Verdot and Malbec grapes will be considered at a later date.

Besides the classic Bordeaux grapes, Bedingham said the winery will also consider planting grapes that reflect "something of this region".

He said wine produced in the area will first supply the Chinese market, but he also hopes to export product to leading markets around the world in future.

With construction of the new vineyard and winery, and then two years of maturing the wine, the product is not expected to be ready for sale in less than three years.

Consumption of wine in China has seen explosive growth in recent years, thanks to growing disposable incomes.

According to International Wine and Spirit Research, a supplier of drinks market data, sales of wine and spirits in Asia-Pacific are expected to overtake those in Western countries by 2016, led by China.

By then, the company said, it expects global wine consumption to have risen from today's 3.39 billion cases per year to 3.68 billion cases.

Seventy-five percent of that increase is forecast to come from China.