Good times in viticulture brings heavy demand for property and fruit
Motivated by favourable export markets, Marlborough’s viticulture sector is positive at present with investors eager to participate.
Joe Blakiston of PGG Wrightson Real Estate, Blenheim says demand for vineyards and properties with potential to grow grapes is well ahead of supply.
“Several significant wine industry ownership changes, featuring established brands Villa Maria and Sacred Hill, were completed in winter, purchased by prominent local viticulture interests. However, in general, property transactions are scarce at present. While these larger sales illustrate confidence in the New Zealand Sauvignon Blanc market, many owners are inclined to sit tight and make the most of projected profitability rather than selling to cash in.
“One large scale Awatere Valley block sold well recently, receiving multiple competitive offers. Prices per planted hectare continue to reach new heights. Some smaller blocks have also transacted: eight to ten hectare vineyard lifestyle properties invariably change hands at benchmark levels, more than $300,000 per canopy hectare in the Wairau Plains, with those in the Awatere Valley also well above $200,000 per canopy hectare.
“Wineries seek to secure the fruit supply they need to meet future demand. Any property with grapes or the conditions to grow them will sell. Low interest rates are encouraging investment, from corporates, private investors, and mid-size operators already in the industry. These factors are all pushing the value of any viticulture property offered for sale to new levels,” he said.
Industry projections indicate that vines will be planted in a further 5000 hectares of bare land by 2024, pushing into previously marginal grape growing areas, while 3000 hectares of older vineyards will be re-planted over the next three to five years.
More immediate issues facing growers include the weather and labour shortages associated with Covid.
Marlborough Area Sales Manager for FruitFed Supplies Phil Dasler says, for the most part, the sector is facing these challenges successfully.
“Flooding affected parts of the Waihopai and Wairau valleys in mid-July. Some stop banks breached, inundating several vineyards. While plantings were delayed in some instances due to the need for groundwork repairs, in most locations water receded quickly, allowing growers to remediate. However, where sediment, silt and forestry debris were deposited on vineyards, especially where that damaged support structures, the cleanup has taken longer, occasionally holding up pruning.
“Along with growers elsewhere in the horticulture sector, the industry has faced labour shortages due to the border restrictions imposed by the pandemic. It appears that growers have addressed these satisfactorily,” he says.
According to Phil, heavy competition for fruit contracts reflects strong demand for New Zealand wine.
“Any grower with uncontracted fruit this season will have a selection of wineries making good offers, which is always a positive sign for the viticulture sector.
“Although there is not much additional development scheduled for 2021, there are already plans for plenty in 2022, which will place demands on the supply of root stock,” he says.