A wine world rarity

26 June, 2018

ICONIC WINERY

Cloudy Bay made it to the UK a year later. This now iconic Marlborough winery was started by David Hohnen, then of Cape Mentelle in Australia’s Margaret River. In 1983 some visiting Kiwi winemakers left him a bottle of Sauvignon Blanc, and he was amazed by the wine. In 1984 he visited New Zealand to see for himself, and met Kevin Judd, who was then working for Selaks. Determined to go ahead with his own Marlborough winery venture, Hohnen raised Aus$1m and in 1985 produced the first Cloudy Bay Sauvignon from 40 tons of grapes trucked up to be made in Gisborne by Judd – mostly over the phone. The following year’s wine made it to the UK and was a hit. The ensuing export demand for this remarkable style of Sauvignon turned out to be the making of Marlborough.

Fast-forward to the current situation and, despite the fact that 2017 was a tricky vintage to say the least, Marlborough Sauvignon is a rarity in the world of wine – a success story. Pretty much everyone in the business is doing OK. The grape price is high enough that the growers can make a good living, but not too high that the companies which rely on these growers can’t make money also. The figures bear this out. The average yield per ton of Sauvignon Blanc in 2016 was 16.5ha a ton. In 2017, the tricky vintage, it was still quite high, at 15.6 tons/hectare. With a juice yield of around 780 litres per ton from machine-picked Sauvignon, yields expressed in European terms are in excess of 120 hl/ha.

The cost of farming a hectare of grapes is NZ$9,000-10,000, and the average price for a ton of Sauvignon is $1,850. So the simplistic reading of these figures is that, per hectare, the grower will be receiving around $30,000, making $20,000 in profit (if the land costs have already been amortised). But New Zealand Wine Growers and the Ministry for Primary Industries have created a Marlborough Vineyard Model, which aims to typify the average vineyard for the region, using data sourced from 38 vineyards (29 contract growers and nine winery-operated vineyards).

According to this model, in 2017 a typical 30ha vineyard would make $11,600 before-tax-profit per hectare.

It’s because of these sorts of calculations that land prices in the region are high. In the best spots of the Wairau Valley (the lower Wairau, where it’s possible to get 22 tons/ha of good quality Sauvignon) a hectare will set you back NZ250,000. In cheaper areas of the Wairau, it might be $150,000, but the average is around $200,000.

There is still some more space in the Awatere (water availability there is the limiting factor, but there are lots of promising unplanted sites still), but the Wairau is now pretty much planted out. You can drive 50km up the Wairau Valley from Blenheim and still see vineyards on either side of you. Large companies are on the lookout for new vineyards to purchase or contract, because the more grapes they can source, the more wine they can sell, and they are keen to secure vineyards for future growth. And investors figure they can get strong yields through vineyard leasing.





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