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Chinese Wine Titan Changyu Buys Majority Share of Australia’s Kilikanoon

As demand for Australian wine grows in China, its largest wine company is expanding to the Clare Valley
Kevin Mitchell, founder and winemaker at Kilikanoon, will remain with the Clare Valley winery.

MaryAnn Worobiec
Posted: December 14, 2017

China’s largest wine company, Changyu Pioneer Wine Co., has signed a deal to purchase an 80 percent stake in Australia’s Kilikanoon. Financial details of the sale, expected to close in January, have not been revealed, but Kilikanoon’s chief winemaker Kevin Mitchell and managing director Warrick Duthy will retain their shares and stay on for the foreseeable future.

“Changyu [executives] are emphatic that they do not want to change the way we run our business in Australia or the way we go about our business in other markets of the world,” Duthy told Wine Spectator. But Changyu does plan to grow the company substantially.

Kilikanoon Wines was founded in 1997 by Kevin Mitchell. His father Mort owned vineyards and sold grapes in the area before Kevin purchased a property named Kilikanoon in South Australia’s Clare Valley. The vineyards controlled by Mort became the heart of the estate vineyards, which have since grown to 230 acres. The brand is known for its intense Riesling and expressive Shiraz, Grenache and Cabernet Sauvignon.

Production is about 100,000 cases, but Duthy anticipates the sale will give them an opportunity to double production over time without changing their style or quality. Australia recently surpassed France to become China’s largest supplier of imported wine, helped in part by free-trade agreements between the two nations. Currently about 10 percent of Kilikanoon’s total production is sold to China. Duthy estimates that figure will likely grow to 50 percent as production increases.

Changyu’s Australian presence may increase beyond Kilikanoon. “We will also assist Changyu to source South Australia appellation wine on a value for money criteria for their bottled in China Australian wines,” said Duthy.

The investment also represents a boon for Clare Valley, one of the oldest wine regions in Australia. “We are flattered that they selected Kilikanoon and the Clare Valley to invest,” said Duthy, pointing out that Changyu’s representatives in China will be selling on the strengths of the Clare Valley.

Already a titan in the Chinese market, Changyu is becoming an influential force in the global wine market. The company was founded in 1892, and has become not just the largest wine company in China, but all of Asia.

While Changyu produces millions of cases of wine annually in China, as China’s middle-class consumers continue to look to international wines, the company has made several overseas moves. Earlier this year it acquired a majority stake in Chile’s Bethwines (China has also become Chile’s largest wine-export destination). Changyu also owns Château Mirefleurs and Roullet-Fransac Cognac in France and Marques Del Atrio from Spain. The company joined forces with Canadian Aurora Ice Wine Company and created Changyu Kely Estate of New Zealand, collaborating with the Karikari Estate of New Zealand.

The company has also focused on wine tourism within China, with several large estates complete with French-style châteaus.

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