Mortgagee sales are becoming an increasingly common theme in the New Zealand wine industry, as vineyard owners are forced to put their properties up for sale.
The latest victim of the glut and economic downturn has been Clansman Vineyards, which had holdings in both the Wairarapa and Marlborough.
A quick website search of real estate agent, Bayleys, shows that in the last 6 weeks River Farm in Marlborough has gone on the market. Another mortgagee sale of a 167ha vineyard site 7km outside of Blenheim is also on the books, as well as pages of vineyard sales throughout the country.
Wineries that are handling the downturn could grab a bargain: estate agents report land prices have halved in the past four years plus interest rates are also relatively low, making it seem like a good time to buy. But who has the money to invest? Planting has come to a virtual standstill and inflation is high.
And foreign investors will be put off by the strong dollar – it’s value has increased by more than 30% in value in the past two years against the British pound, and 20% against the US dollar.
Then again, anyone who invests in a vineyard needs their heads checked in my opinion.
The latest figures from the UK show the average price of a bottle of wine from its 10 major wine supplying-countries has risen across the board. Shock horror, even unfashionable Germany has managed a price increase!
Cause for celebration? On the surface, yes. It suggests the consumer is trading up, willing to spend more but look deeper and things aren’t as rosy as they first appear.
The average bottle price of a New Zealand wine is up from £6.01 to £6.07 per bottle in the UK off-trade, Australia has seen a 13 pence increase to £4.72 while the average price of a South African wine is up 40 pence to £4.39.
However, increased duty charges and a weak British pound vs. most currencies suggest that the increased costs in the value chain are not being passed on in full. Customers are paying a bit more for wine but it appears that it is suppliers that have to absorb most of the cost increases. This is a problem for profitability.
In South Africa, Australian and New Zealand, strengthening currencies and duty rises meant existing prices were unsustainable. In some instances average bottle prices have increased but total sales have fallen. South African sales have dropped by 15% in value in the past 12 months and 22% by volume.
Australia and New Zealand have increased sales volumes but how much of that is sold at huge discount, bulk shipped and made into supermarket brands? According to Wine Australia, in the past year 47% of all wine shipments from Australia were bulk not bottled. Is this a sign of Australia’s economic credentials (bulk shipping has a lower carbon footprint than shipping in bottle) or is it a consequence of its massive oversupply problems?
What is clear is that consumers are being forced to pay more for their wine in the UK, producer margins continue to be nibbled away. Profitability has to come before volume sales if wineries are to survive. But, as South Africa has witnessed, there’s only so much people are willing to pay.
Consumers know Marlborough makes high quality, easy to drink Sauvignon Blanc but if you asked consumers to point to it on a map, it would be a pin the tail on the donkey exercise.
The latest research on the significance of region of origin by Wine Intelligence shows that at mainstream price points (£4 to £4.99) Marlborough, the Barossa Valley and Napa all feature in the top five regions from which UK consumers say they are likely to buy wine. Marlborough and the Barossa are still among the top choices when the same question is posed for purchases of £8 and above. So far so good.
Although prompted awareness of Marlborough is relatively low, consumers have a favourable view of New Zealand and say Marlborough wines are high quality, easy to drink and often recommended by friends. They are also more likely to be available in casual restaurants.
Research director Jean Philippe Perrouty said: “Bordeaux and Burgundy are known by 90% of UK consumers but only one in four or less say they would buy it. UK consumers say they are more willing to buy Marlborough, Rioja or Barossa - if they have heard of them - than Bordeaux or Burgundy. These wines have been able to create the perception of affordable quality.”
Still so far so good.
However, when it comes to knowing where Marlborough is or what the region is like, you’ll get a blank look. Many US consumers associate cigarettes with the region. How positive. Nevertheless it’s a similar story for Chianti, which conjures up images of Italy, red and Hannibal Lector.
Beyond country of origin, it seems most regions are failing to portray an effective image.
So where now?
Tourism is key. If you can get people to visit, they become ambassadors for the region. And it just so happens 85,000 people are heading this way for a few rugby matches in September.
Longer term, Marlborough should be shouting to the rooftops about tourism and food. The Marlborough Sounds are breathtaking, tell people about them. There’s great walking, mountain biking, and fishing on your doorstep. Plus, there are a wealth of artisan producers, from oyster farms, to pine nut orchards and cheese makers.
The Barossa has employed the skills of Paul Henry, ex general manager Wine Australia, to educate consumers that there’s more to the South Australian region than burly Shiraz. Perhaps Marlborough should be doing the same.
Barolo is not a wine for the elderly or terminally ill. It takes a good 20 to 30 years before the tannins become approachable and you’re going to have to stick it in the cellar (or under your bed) until it comes around.
And if you don’t like tannins or acidity, you’d better walk past the Barolo section.
At an Ascheri dinner with Squisito Fine Wines, we were treated to a vertical of Barolos as far back as 1996 and cor blimey, they are still babes in arms. Most wines are dead as dodos by the time they hit 5 or 10 years but not these bad boys.
The likes of Ascheri are from the ‘traditional’ school of Barolo, leaving the wine on its skins for up to 40 days after fermentation completes (that is a loooooong time) and then putting it in oak for 2 ½ years. The modernists take it off the skins much earlier and like plenty of new oak to give more fruit and vanilla flavours.
Wine of the night has to be the 1996 Ascheri Barolo. It’s still as tight as a pair of speedos with lovely mid palate weight, incredible concentration and drawn out, finally-woven tannins. A really elegant wine that’s got lots of life left in it.
I took a moment out from tasting Barolos with MD of Squisito, Alberto Cenci, who tells me about his Italian-Kiwi romance and his love of Aerosmith….!
Auckland’s Royal Easter Show was the highlight of my Easter weekend mainly because it meant I was having a break from MW study, with the exams just six weeks away.
I now know more about alpacas than is healthy and have watched sheep racing competitively over hurdles a.k.a the sheeplechase!
And the size of the cows. I’ve never seen such big’uns except for on Victorian paintings of super-sized cattle. I’m not sure what they were feeding them (steroids?) but they would certainly provide plenty of rump and fillet.
The judging of the cattle was totally foreign to an urban girl like me. The formation of the horn on the Highland cattle, the ‘ease of movement’ and ‘kind eyes’ were all important to the judges. It was like getting a glimpse of another world and another language. Which got me thinking that maybe this is how the average consumer perceives the wine world. Come on, can we really smell cat’s pee on a gooseberry bush and, what does ripe acidity or fine grained tannins mean? I am as guilty as the next wine writer of this but it does make us sound pretty pretentious and excludes your average person in the street.
It’s important not to dumb down but making it seem less fluffy and more accessible would be a positive improvement. Perhaps we need to look at a different way of creating tasting notes that actually mean something to those who don’t spend all day everyday breathing wine (which, is certainly more appealing than breathing in that noxious cattle smell).