By staff reporter Wang Shanshan

The U.S. bank Goldman Sachs paid US$ 50 million to buy 25 percent stake in Anhui based Kouzi Wine Inc., a privately-owned distilled spirits producer, according to Yu Shengzhi, executive director of Goldman Sachs Gao Hua Securities.

Caijing learned that Goldman Sachs and Kouzi Wine signed a letter of intent for the deal in May. By August, they had won the approval from the Anhui Provincial Development and Reform Commission. The purchase was reportedly completed in September.

However, no further details about the deal were revealed.

A manager surnamed Gao from the Beijing branch of Kouzi Wine told Caijing that Goldman remains a strategic investor of Kouzi Wine and will not be involved in the company's operation.

Food industry analyst Bo Guanhui from Citic Securities said that foreign capital has been flowing into China's alcoholic beverage industry in recent years, lured by the high profit and promises of a huge new market.

In early 2007, the beverage giant Diageo bought 17 percent of Sichuan Shuijingfang Group (SSE: 600779). And in May of the same year, French Moet-Hennessy Beverage Company acquired a majority stake in Sichuan Wenjun Alcoholic Company, a subsidiary of the famous Jiannanchun Alcoholic Group.

The draw for these firms is clear. According to industry analysts at Wande Consultants, China's listed liquor makers reported an average profit growth of 61 percent year-on-year for the first three quarters this year.

Bo Guanhui told Caijing that the capital injection is a windfall for Kouzi Wine since it will allow them to expand production capacity and improve marketing. But Bo dismissed the possibility that Kouzi will seek to list in the short term.

In 2007, Kouzi Wine posted annual production capacity of 17,000 tons. The company's sales revenue reached 1.1 billion yuan, ranking it fifteenth among China's distilled spirits companies.