CHAMPAGNE PRODUCTION is confined to 80,000 acres of terroirabout 100 miles east of Paris, but Moët Hennessy will soon be producing upmarket bubbly from a new winery just south of Inner Mongolia.

Moët, which owns historic champagne brands Dom Pérignon, Veuve Cliquot and Krug, has joined forces with a Chinese state-owned agricultural group to develop a sparkling wine in the remote Ningxia Hui region.

The wine will not be sold as champagne – a name that is still reserved for wines from the eponymous region – but it will aim to satiate Asia’s booming demand for bubbly.

Ningxia’s climatic conditions, 900km west of Beijing, are not that different to those of Champagne, with the Yellow River substituting for France’s placid Marne.

The joint venture will include 163 acres of land holdings, with Moët – which is part of Bernard Arnault’s LVMH luxury empire – in control of a new winery on site. No financial details have been disclosed.

The end-product will be sold under the Chandon label, a secondary brand that markets wines from Moët’s other non-French domains in California, Brazil, Argentina and Australia.

China has become a buoyant market for top-end alcohol brands, in 2010 overtaking the UK as the biggest export market for Bordeaux wines in value for the first time, according to France’s Conseil Interprofessionnel du Vin de Bordeaux.

Between 2005 and 2009, annual wine consumption in China more than doubled to 867 million litres, equivalent to more than one billion bottles, according to Vinexpo, a wine exhibition group.

International vintners have been driven to try to grow grapes in more exotic locales, including China, India and Mongolia.

As well as affordable land, they are attracted by the growing appetite for wine in emerging markets, in contrast with steadily falling sales in developed countries.

In 2009, Château Lafite-Roths-child, one of winemaking’s most august names, partnered up with China’s largest state-owned investment company, CITIC, on a 60-acre project. France’s Pernod Ricard group already grows in the Ningxia region which Moët is now targeting.

In 2007, LVMH bought a 55 per cent stake in Wenjun, a brand of baiju,a clear grain spirit popular in China, in an attempt to transform the image of the drink away from cut-price firewater to a luxury brand.

– (Copyright The Financial Times Limited 2011)