Kilikanoon

China's Changyu Buys Majority Stake In Australia's Kilikanoon

China’s oldest winery, Changyu Pioneer, has bought an 80% stake in Clare Valley-based winery Kilikanoon Wines for AU$20.6 million, the latest purchase from the Chinese winery following acquisitions in France, Spain and Chile.

With the rise of Australian wine’s popularity in China and an expected tariff reduction based on the two countries’ Free Trade Agreement, Chinese companies now seem to be looking beyond Bordeaux to purchase wine estates and Changyu is the latest to join in. Australia surpassed France in October as China’s biggest source for imported wines for the first time.

Despite Changyu’s majority stake, the deal would see Kevin Mitchell, the winery’s chief winemaker, and Warrick Duthy, managing director, continue to remain at their posts and keep their shares, reported local newspaper Times of the Coast.

Founded in 1997, the small boutique winery in Clare Valley was named James Halliday’s ‘Winery of the Year’ in 2013.

The deal will most certainly give the winery strong financial backings and an unparalleled entrance into China market, leveraging on Changyu’s nationwide sales network.

“After the acquisition, its products will be incorporated and sold through Changyu’s channels in the Chinese market, which will help it to gain a sound sales network in a short time”, wrote Chinese newspaper The Economic Observer.

Speaking of the partnership, Duthy told the local newspaper, “They evaluated (Australian companies and regions) and chose Clare. They have said that, we have chosen Clare. This style of wine suits the Chinese palate.

“If the Chinese investment community think Australian wine is worth investing money into then it’s not just a short boom we are seeing,” he added.

Changyu first visited Kilikanoon in 2016 and the negotiation started in early 2017. However, the investment is subject to Chinese Government approvals, and settlement of the deal is planned for mid-January 2018.

Earlier this year, Changyu acquired an 85% majority stake in Chile’s Bethwines for US$50 million, following previous acquisitions of two wineries in France and one winery in Spain.

Kilikanoon was founded in 1997 when winemaker and proprietor Kevin Mitchell purchased the property of the same name in the hamlet of Penwortham in South Australia's picturesque Clare Valley. Hailing from a long line of wine grape growers, Kevin now had the opportunity to turn the vision of creating his own wine brand into a reality.

Kevin's father Mort Mitchell has been a defining influence, planting and tending to Kilikanoon's Golden Hillside suite of vineyards including the famed Mort's Block, for over 40 years. Kevin's fascination with terroir is a result of years spent playing and eventually working in these vineyards alongside his father. The first Kilikanoon branded wines from the 1997 vintage were four single vineyard wines, each from Kevin and Mort's vineyards.
These were the 'Oracle' Shiraz, 'Prodigal' Grenache, 'Blocks Road' Cabernet and 'Mort's Block' Watervale Riesling.

Kilikanoon's expansion has been made possible by invaluable partnerships, together with the acquisition of, and access to, outstanding vineyards in the most esteemed grape growing regions in South Australia, including the Barossa Valley and McLaren Vale. From humble beginnings with just 25,000 bottles produced from the first vintage, Kilikanoon has grown significantly, now exporting to over 25 countries. The marque has become one of the leading wine brands in Australia.

Kilikanoon has been recognised both in Australia and internationally, receiving high praise from some of the world's most respected wine critics. The 2002 Clare Valley Wine Show chaired by prominent Australian wine writer and judge, Huon Hooke, propelled Kilikanoon into the spotlight, winning 6 of the 7 trophies awarded. Going from strength to strength, the Oracle Shiraz has twice won 'Best Shiraz' at International wine shows, while more recently, James Halliday's Australian Wine Companion named Kilikanoon 'Winery of the Year' in 2013. In 2014, Kevin Mitchell was inducted into the inaugural Clare Valley Hall of Fame as Winemaker of the Year.

One of the premium wine grape growing regions of the world, the Clare Valley optimises nuances of the sub regions to produce exceptional and often elegant examples of Riesling, Shiraz, Cabernet and Grenache.

Despite covering a relatively small area, the numerous sub regions of the valley exhibit individual micro-climates that particularly favour these varieties, while altitude variation from 300m to 600m results in vastly different terroir. Additionally, soils vary through the valley, from red brown 'terra rossa' over limestone, through to black alluvial soils in low lying areas.

A high daily temperature range (as much as 20 degrees Celsius in summer) helps to lock in the natural acidity, varietal flavour and aroma of white varieties and promotes tannin, structure and colour in red wines. This diversity enables Kilikanoon to showcase Clare Valley terroir throughout the portfolio.

Attunga Vineyard

Finns Road, Auburn, Clare Valley, South Australia, 5451 | 12 ha with 0.75 ha of Attunga 1865 Shiraz vines

Originally planted in 1865 and owned by Peter Burner & Michele Gates, around 800 of the original Attunga vines remain in a mere 13 north-south running rows. Each row is 175 metres long and spaced approximately 2.5 metres apart, planted on a west, south-westerly slope. The vines changed from old bush vines to single wire 4ft trellis around 15 years ago for more consistent yields and easier harvest. Subsequently the average annual crop of 2-2.5 tonne with an extraction rate at the winery of approximately 600 litres per tonne (or approximately 3kg per vine) produces around 2.4 bottles per vine. The Attunga vineyard sits at 329-336m above sea level. The soil is Terra Rossa – with alluvial clay red loam over limestone over shale over bluestone/slate which is thicker at the north of the block and thinner at south. The limestone being quite porous holds water during winter which the vines can draw on when they feel the need. Nature provides its own 'irrigation' to this dry-grown vineyard.

Baroota Vineyard

Gribble Road, Baroota, Southern Flinders Ranges, South Australia, 5495 | 32ha under vine and 2ha of olives

Baroota is an exciting new vineyard area in the Southern Flinders Ranges. This area has an attractive Mediterranean micro-climate with cooling breezes from the nearby Spencer Gulf tempering the dry summer heat. The soils are rich and well suited to both grapes and olives, and an excellent clean water supply is provided by artesian bores. This vineyard is comprised of approx 7 ha of Cabernet planted in 1996 and 1998, 17 ha Shiraz planted 1996 and 1997, 3.5 ha Shiraz planted in 2000 and 4.5 ha Shiraz planted 2001. Kilikanoon makes a number of wines from the Baroota area vineyards, including the Baroota Reserve Shiraz.

Green's Vineyard

Basedow Road, Tanunda, Barossa Valley, South Australia, 5352 | 15.39 ha with 13.7 ha under vine

In the heart of the Barossa Valley, Green's Vineyard has a combination of premium varieties including Shiraz and Grenache some of which are more than 40 years old. Kilikanoon iconic Crowhurst and Green's Reserve Shiraz are produced from this vineyard, with fruit also going into the Kilikanoon Testament Shiraz (95 points) and Medley GSM (93 points "drink this liquid Viagra over the next 5-7 years..."Robert Parker 2006). Soil of sandy loam over heavy red clay imparts these grapes with strong tannins and superb structure.

Meyman's Block

Block's Road, Leasingham, Clare Valley, South Australia, 5452 | 4.5 ha under vine

Bordering the Walton's Vineyard, this vineyard is comprised of dry grown Shiraz, planted in 2000 with the first crop was harvested in 2003. Planted in an east-west aspect the soils are red brown earth over limestone with some ironstone at the western end of the block. The fruit from this vineyard is of very high standard and provides the foundation for our Kilikanoon Covenant Shiraz.

Morrisons Block

Horrock's Highway, Leasingham, Clare Valley, South Australia, 5452 | 25 ha with 21 ha under vine

Purchased by Kilikanoon in 2008, this vineyard has become one of the premium Shiraz and Riesling producing blocks in the Kiilikanoon portfolio. Planted in red brown earth over limestone on a westerly aspect, the oldest vines here date back to the early 1970's. The most premium of grapes from this block become our Oracle Shiraz, while the remainder are typically destined for our award winning Covenant Shiraz. Our east west Riesling producing block finds its way into our Mort's Block Riesling, so named after winemaker Kevin's father.

Mort's Block

Horrock's Highway, Leasingham, Clare Valley, South Australia, 5452 | 6 ha under vine

Mort's Block vineyard was planted over 40 years ago by Mort Mitchell, father of Kevin Mitchell, Kilikanoon's founder and Chief Winemaker. This vineyard is at the heart of a group of Watervale Estates vineyards which provide the core fruit for Kilikanoon's most prestigious labels - The Oracle and Covenant Shiraz, Blocks Road Cabernet Sauvignon and Mort's Block Riesling. Traditional methods are employed to tender this vineyard; careful rod and spur pruning and hand picking pay homage to its namesake Mort Mitchell. Light brown earth over limestone provides the ideal growing conditions for premium Shiraz and Riesling.

Tregea Vineyard

Penna Lane, Penwortham, Clare Valley, South Australia 5453 | 2.75 ha with 1 ha under vine

Planted in 1998 this small, dry grown Cabernet producing block frames our Cellar Door and provides not only the superb grapes for our Blocks Road Cabernet, but also a beautiful backdrop to our Cellar Door and Tregea's Terrace. Soil offers gravely loam, east west running block with an easterly aspect. Being tucked away these grapes are typically the last picked and mark the end of vintage for our viticultural & winery team.

Trillian's Hill Vineyard

Springfarm Road, Penwortham, Clare Valley, South Australia, 5453 | 43 ha with 24.28 ha under vine

Established in 2001, Trillian's Hill boasts gravely loam soils and benefits from an abundant water supply. Varieties planted include Shiraz, Viognier, Pinot Gris, Riesling and Mouvedre. Much of the fruit used in the Killerman's Run Range is also sourced from this vineyard. The elevation of approximately 450-500 metres makes this one of the highest vineyards not only in the Kilikanoon portfolio, but in the Clare Valley.

Walton's Block

Walton's Block | Block's Road, Leasingham, Clare Valley, South Australia, 5452 | 4 ha planted to vine

Walton's is situated in the Watervale sub-district of the Clare Valley with its classic soils of red brown earth over limestone. Planted with premium Clare Valley varieties of Riesling, Grenache and Cabernet Sauvignon, the vineyard is approximately 40 years old. The grapes are dry grown, hand pruned and handpicked. The red varieties form the basis of Kilikanoon's premium labels - Block's Road Cabernet Sauvignon and Prodigal Grenache.

Traditional winemaking techniques are employed to produce hand-crafted wines with the unequivocal essence of Kilikanoon. Keeping all parcels and barrels separate until blending is a key aspect to achieving regional and varietal definition in each wine. Furthermore, the Reserve wines are produced in extremely limited quantities, solely in exceptional vintages, maintaining Kilikanoon's consistent focus on reliability and over-delivery.

Our terroir is of great importance; the synergy of place, soil, climate and people - the elements which ensure each vineyard's unique qualities. Kilikanoon's vineyards have been carefully selected to enable a range of wines which express the individuality of their respective regions. At the southern end of Leasingham lies the Golden Hillside, the heart of Kilikanoon's Estate vineyards that comprise Mort's Block, Covenant, Walton's and Attunga, while adjacent to the original Kilikanoon cottage, now its cellar door, is the Tregea vineyard in the cooler and rugged Skilly Valley.