Viticulture Market Update

The New Zealand viticulture and wine sector has been through an interesting year of surprises and challenges.

Firstly, the pandemic put fear into the industry, and everyone initially expected wine sales to drop.

However, the opposite happened, and sales skyrocketed. Businesses sold out of their current vintage, along with what they held in stock and the price for bulk wine then increased dramatically as demand spiked with companies looking to buy from others to fulfil promised orders.

These trends were experienced throughout the country but were most apparent in our largest wine producing region, Marlborough.

Producers were looking forward to a big 2021 harvest in March to replenish stock levels however, Mother Nature had other ideas.

It became evident that the cold weather during the critical spring flowering season had prevented the fruit from setting – as a result, the grape tonnage was well down on forecasts, with some vineyards reporting production decreased as much as 40 percent.

Some market commentary is suggesting prices of up to $5.00-$6.00 per litre for Sauvignon Blanc, where a year ago, the expected range was $3.00-$3.50 per litre.

There are currently two main types of buyers in the market searching for vineyards; the larger wine companies eager to secure more grape supply and interested in big established blocks or parcels of land to purchase, develop or lease, and investment groups wanting larger parcels of land with either good grape supply contracts, or leases with a wine company.

At the smaller end of the scale, Marlborough is scattered with vineyards ranging from 1-10ha with houses on them, similar to a lifestyle block, but with a vineyard producing a solid income and return on investment through lease or contractual supply.

Recent sales for these properties, show price ranges from $1.5 million to $3.5 million depending on size, location, quality of the residence on the property and canopy yield.

Read more...