Jan. 11 (NBD) -- China's largest wine company, Yantai Changyu Pioneer Wine Co. (Changyu) announced on Thursday the management change in the Board of Directors.

Zhou Hongjiang, previously the company's vice president and CEO, replaced Sun Liqiang as the chairman of the Board of Directors, a change which is regarded as a start of a new era for Changyu by some industry insiders.

On 12 December last year, Changyu announced its first foray into Australian wine market, purchasing 80 percent stake in Australia's Kilikanoon while Sun Liqiang stepped down due to personal reason.

Management change in two decades ushers in new era

Zhou Hongjiang, born in 1964, joined Changyu after graduating with a master's degree in 1988 and served as general manager of the sales unit and then vice general manager, general manager and vice president.

Sun Liqiang, the predecessor of Zhou, was elected as the chairman of Changyu in 1997 and led this time-honored wine maker to embark on a path of rejuvenation. In 2004, Changyu introduced two overseas shareholders, Italian Illva Saronno Holding SpA and Washington-based International Finance Corporation, diversifying its equity structure, which was a historic move.

Following that, Changyu built chateaus in Beijing, Shandong, Liaoning and Shaanxi provinces, Xinjiang Autonomous Region and Ningxia Hui Autonomous Region and planted vineyard of 300,000 mu (20,000 hectares), laying out its industry landscape across China.

An anonymous person involved told NBD that the management change coming after nearly two decades means the end of an era.

Another person familiar with Changyu said to NBD that Zhou Hongjiang has been taking charge in front of the public frequently for several years, while Sun Liqiang seldom appeared in investors' meetings or news briefings.

Zhou once brought forward to a signature slogan "Legendary Quality, Centennial Changyu", which helped to establish the brand image of Changyu.

Ouyang Qianli, an expert of China's wine industry thought that with the domestic wine production landscape having taken shape, Changyu, as the leading wine maker in China, will inevitably encounter a battle against imported wine.

Zhou acknowledged the impact posed by imported wine, yet he regarded such impact as a beneficial factor to push domestic wine makers to restructure themselves in order to upgrade competitiveness.

Photo/Shetuwang

Wine maker to step up global expansion

Facing challenges brought by foreign wine makers, Changyu thought that if an enterprise couldn't mobilize global resources to empower and equip itself to participate in international competition, it will lose the domestic market share that was once in its hands.

Last December, Changyu announced that it had signed a deal to purchase a majority stake in Australia’s Kilikanoon Estate Pty Ltd for AUD$ 20.605 million (16.06 million U.S. dollars).

The core asset and business of Kilikanoon comes from its wholly-owned subsidiary Kilikanoon Wines whose flavor and characteristics meet the requirements of Chinese mainstream consumers.

After the deal, products of Kilikanoon Wines will be sold in China through Changyu's marketing channels, which will largely enhance its presence in China, one of the largest wine consumers across the world.

Before its foray into the Australian market, Changyu has established a strong presence in world's major wine producers including France, Spain and Italy.

According to the list of "Top 10 Global Wine Brands 2017" released by Drinks Business, a monthly international B2B magazine and website, Changyu took the 4th place with an annual sales volume of 15 million boxes in 2016.

Relevant people from Changyu told NBD that benefiting from the series of industry deployment at home and abroad, the company distinguishes itself from other domestic wineries in terms of production capacity and performance.

But, some industry insiders believed that Changyu's business of imported wine still remains at an early stage. The mergers will not show much effect due to the company's limited experience in acquisition and high-end chateau operation.

Yang Zhengjian, deputy secretary general of the China Food Association, said that if Changyu wants to take a share from the increasing wine market and to become a global winery, it needs to accelerate its international expansion.

Email: gaohan@nbd.com.cn