How much water can I mix with Kedem Matuk Kal wine for kiddush or havdalah?

Wine mixed with water is considered wine as long as most people would drink such a mixture in place of wine (Mishna Berura 204: 29, 32).

In addition, some add that it must also contain at least 50% wine (Rabbi Ovadia Yosef), and some are more strict that it must contain at least 67% wine (Chazon Ish), although others are lenient that is must only contain 16% wine (Mishna Berura 272: 16), provided that the aforementioned requirement is fulfilled that people would drink such a mixture instead of wine . In a time of need one can rely on the lenient opinion, but if possible one should preferably have at least 50% wine.

See Halachos of Brachos (Bodner, p. 447) for further discussion of this topic.