(Yicai) Dec. 12 -- Changyu Pioneer Wine, China’s largest winemaker, plans to take a minority stake in Australia’s Kilikanoon Wines for about AUD390,000 (USD257,000).

Changyu will acquire the 1.5 percent stake from Woodvale Vintners and WJ Duthy Holdings Superannuation Fund at a price of AUD44.17 (USD29.10) per share, the Shandong-based firm said after the close of stock market trading today.

Kilikanoon Wines is based in Clare Valley, a famous wine-producing region, with a plentiful supply of grapes by variety and quantity, Changyu said. It complements Changyu in terms of products, raw materials, and sales channels, the firm added.

Australia used to be the top wine exporter to China. China imported USD860 million worth from Australia in 2019, accounting for 35 percent of the Chinese market. That plunged to just 3 percent last year after China began to levy anti-dumping duties on Australian wine in March 2021 at rates of up to 218.4 percent.

But economic and trade relations between the two countries have been improving this year, and China’s commerce ministry started to review anti-dumping and countervailing measures applied to imported Australian wines on Nov. 30. It will complete the review by the same date next year.

China’s wine market is still in a slump, though. Production totaled 111,000 kiloliters in the first 10 months, down 30 percent from a year ago, and down about 90 percent from the high point reached in the same period of 2012.

Changyu pointed out a degree of risk in the Kilikanoon deal, as its return on the investment would suffer should sales in China fail to meet expectations.

Changyu maintained strong earnings results in the first half of this year, with a 1.4 percent gain in net profit to CNY364 million (USD50.7 million).

The firm’s shares [SHE: 000869] have fallen 17.5 percent since the end of last year, compared with a 12.6 percent drop in the benchmark Shenzhen Component Index.

Editor: Tom Litting