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Marlborough Viticulture Market Update | February 2023

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Marlborough Viticulture Market Update _ February 2023

Strong yields for Marlborough’s 2022 vintage with favourable returns to growers

After a lower than anticipated previous four years, Marlborough’s 2022 vintage yields increased 54 per cent on 2021. With the contract grape price increasing over recent years favourable returns to growers have resulted, although tempered by industry issues including labour shortages and increased operating expenses.

Marlborough Viticulture Property Sales in 2022 were dominated by small to medium scale blocks with strong demand driven by existing wine companies and the lifestyle market. Sales in 2022 were above the long-term average of 20 transactions with 28 confirmed sales of vineyard properties with Upper Wairau, Rapaura and Lower Wairau having the most properties change ownership.

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Table: Marlborough Viticulture Sales 2004-2022
Source: Colliers Rural Valuation

The average vineyard sale price per hectare has increased across Marlborough based on the properties that have transacted. Overall, the combined value of vineyard transactions throughout Marlborough in 2022 totalled approximately $125 million with a total area of approximately 1,000 hectares of viticulture land sold.

The 2021/22 season brought about a favourable financial outcome for many Marlborough grape growers, owing to high yields and elevated prices. The high yields of the 2021/22 season were a result of favourable weather conditions, including warm temperatures during flowering that facilitated ideal pollination and fruit set, along with ample rainfall in December 2021 and a substantial rain event in February 2022.

Vineyard profit before tax per hectare for the 2022 vintage has shown a lift in returns based on favourable growing conditions throughout Marlborough, with favourable yields from sauvignon blanc. Vineyard working expenses increased by six percent in 2020/21, and by a further nine percent in 2021/22. Increasing wage rates was a significant driver, with labour expenses accounting for over 55 per cent of total vineyard working expenses.

Returns will fluctuate from season to season depending on growing conditions, however the market takes a long-term view on profitability within the industry. Graphed below is vineyard profitability along with vineyard values and profitability trend line which shows a relatively consistent relationship in the market.

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Table: Marlborough Vineyard Profitability vs Vineyard Value 2010-2022
Source: Colliers Rural Valuation

To learn more about the latest Key Vineyard Value Drivers download the entire Marlborough Viticulture Market Update for February 2023 below.

 

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Marlborough Viticulture Market Update | February 2023

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Tim Gifford

Director | Rural Valuation

Blenheim

Tim has 13 years property valuation experience and is based in our Blenheim office. Prior to joining CAPI in 2006 he worked as a valuer for Quotable Value based in Christchurch..

Since 2006, Tim’s client work has included viticulture, high country tenure review and rental valuations, pastoral valuations, lifestyle, specialised asset valuations and compensation for various infrastructure projects nationwide.

Tim’s viticulture experience includes the valuation of vineyards for financing, sale & purchase and rent setting purposes for a number of clients including Pernod Ricard, Indevin, Wither Hills, Cloudy Bay, Allan Scott Wines, Treasury Wine Estates, plus a number of others. Tim is also frequently engaged to provide valuation advice to most of the major banks. Having grown up and lived most of his life in Marlborough, Tim has in depth local knowledge of the region.

Tim has extensive experience in valuing large pastoral and high country properties throughout the South Island, either on behalf of Linz for tenure review or rent review purposes or for corporate and private landowners. Properties valued include Muller Station, Mt White, Mt Albert, Mt Creighton, Godley Peaks, Hossack, Glen Wye, Glenhope, Forest Range plus many more. Tim is designated as an assessor under Section 23P Crown Pastoral Land Act 1998 to provide rental assessments on Crown Pastoral Lease properties.

Compensation is another key area of expertise and Tim has provided property advice on a number of projects nationwide including Transpowers 400kV transmission line build through the Waikato, Central Plains irrigation scheme through Canterbury, land acquisitions for roading on behalf of the New Zealand Transport Agency as well as new transmission line easement assessments for various network operators throughout New Zealand.

Tim offers our clients excellent technical skills and market knowledge, together with a sound appreciation of both private and public sector imperatives. He plays a key role in our viticulture, pastoral and compensation valuation teams.

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Jack Powell

Associate Director | Rural Valuation

Blenheim

Jack has a strong rural background growing up in North Canterbury where he developed a range of skills which have aided him in his valuation career. 

Jack started working for the company in 2015 after graduating from Lincoln University, where he worked alongside our senior valuers gaining valuable experience. During this period Jack was involved in undertaking corporate dairy farm portfolio valuations for financial reporting, planning and potential acquisition purposes throughout Canterbury and the Waikato, as well as assisting in high country station tenure reviews.

In 2018 Jack completed his registration before taking time off to follow a professional rugby career in Russia. After returning in late 2019, Jack returned to the Rural Valuation profession. 

At the start of 2021 Jack relocated to our Blenheim office where he is now working alongside Tim Gifford. Since moving to Blenheim, Jack has been involved in a number of large scale 
vineyard valuations for finance and rental purposes as well as continuing to work within the dairy and pastoral sectors. 

In addition to Jack’s valuation work he is also a high-power user of all sorts of applications helping to create efficiencies within the Company by developing our modelling and database tools.

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