So far, Chinese investment in Australian wine assets has been relatively low-key, focusing mainly on vineyards and production facilities that produce large quantities of bulk wine for brands in China`s domestic market.
But that changed this week when the board of Zhangyu Vineyards, China`s oldest winemaker, approved an 80 percent stake in Kilikanoon Estate, a well-known South Australia winery.
Founded in 1997 by winemaker Kevin Mitchell, Kilikanoon is the most famous Australian wine brand acquired by Chinese companies.
The winery was named winery of the year by wine critic James Halliday of the year and was dubbed "one of the best wineries in Australia" by influential American wine critic Robert Parker Jr.
Kilikanood has an outstanding international reputation, especially Rich Red wines and the elegant Riesling (Rieslings) wines.
This is Zhang Yu`s first foray into the Australian wine industry. The brewery, based in Yantai, Shandong province, has assets in eight Chinese provinces and has been making wines for the domestic market since 1892. In recent years, Zhang Yu has sought co-acquisitions in wine regions around the world as tariffs on imported Chinese wines plummeted. It has breweries in Bordeaux, the Rioja region of Spain and Chile, and a brewery in Konek, France.
As Australian wines become increasingly popular in China, the acquisition of Australian assets has become a key part of Zhang Yu`s expansion plan.
The company has targeted producers of Clare Valley (Clare Valley), rather than widely recognized areas such as the nearby Barossa Valley (Barossa Valley), a major endorsement of Claire Valley.
"Clare Valley shows its competitive edge in the market, both in terms of variety and quantity, and its unique flavor is very suitable for mainstream Chinese consumers," Zhang Yu said in a statement.
At the request of the new owner, Kilikanoon`s general manager, Warrick Duthy, founder Mitchell, and shareholder Bruce Baudinet will retain a small stake. Duthy said the deal would benefit the region.
"they [Zhang Yu] have nearly 5000 sales representatives in China and they spread messages in China every day to tell customers all over the country about this particular place in Australia and the fine wines it produces," he said.
Negotiations on the deal began in 2016, during which time violinist and composer Nathan Waks was seeking to sell off his 30 percent stake in Kilikanoon.
Kilikanood, which processes about 1600 tons of grapes a year and sold just over one hundred thousand cases last year, is a relatively fine winery by Chinese standards.
"We need to consider growing and contracting more grade A and B fruits to make some of our top wines slightly higher, and we will be looking for more grade C fruit," says Duthy. Increase the production of some wines at lower prices. "
"there are a lot of opportunities and benefits here, not just for Kilikanoon, for the whole Claire Valley."
The investment is subject to approval from China`s goverment and is scheduled to be closed next month.
