(Yicai Global) Aug. 11 -- Chinese food and beverage company Shanghai Bairun Investment Holding Group Co. [SHE:002568] is set to spend about USD75 million (CNY500 million) to build a vodka and whiskey factory in Sichuan.

Bairun said that its wholly-owned subsidiary Shanghai Bacchus Liquor Co. signed a project investment agreement with the Qionglai government in Sichuan province on August 9, outlining plans to establish a CNY500 million vodka and whiskey factory in Linqiong Industrial Park in Qionglai city.

Bacchus has won a bid for the use of about 219.2 mu (36.1 acres) of land in Linqiong Industrial Park in Qionglai city for a term of 50 years, Bairun said. Bacchus will complete the facility's construction and put it into operation within 33 months of finishing the land lease paperwork. Bacchus is a leading enterprise in China's ready-to-drink cocktail industry, and vodka and whisky are important ingredients of such beverages, Bairun said. As China's market for ready-to-drink cocktails develops, the demand for base liquors is increasing.

Founded in 2003, Bacchus focuses on the development of RIO-branded ready-to-drink cocktails. Its CNY987 million in sales in 2014 topped the industry. Bairun acquired Bacchus in 2015, but RIO posted a loss due to over-marketing and excessive production expansion.

RIO sales were CNY813 million last year, while its sales expenses hit CNY741 million, Baidu Inc.'s [NASDAQ:BIDU] financial data show. Bairun logged a net loss of CNY147 million last year.