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Marlborough Viticulture Market Update | February 2021

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Marlborough viticulture market stands out with strong sale numbers in 2020

The volume of vineyard sales in Marlborough has increased over the past year, after two years of lower than average activity. The number of transactions is often a good indication of market sentiment and indicates strong demand across the lifestyle and productive vineyard market at present.

Our analysis shows that values appear to have increased throughout the second half of 2020, despite uncertainty surrounding the impacts of Covid-19.

2021_02 Viticulture Graph 1

Table: Marlborough Viticulture Sales 2004-2020
Source Colliers Rural Valuation


Vineyard profit before tax per hectare for the 2020 vintage has shown a lift in returns on the basis of favourable growing conditions throughout Marlborough, with high quality fruit produced at favourable yields. Vineyard operating costs have continued their upward trajectory with a rise of around 2% on last year, mainly as a result of increased labour cost.

Returns will fluctuate from season to season depending on growing conditions experienced and the market takes a long-term view on profitability within the industry.
We have graphed the vineyard profitability as reported in the Vineyard Benchmarking Report produced by NZ Wine and MPI, along with the model vineyard value, which shows a relatively consistent relationship on a 5 year rolling average basis.

2021_02 Viticulture Graph 2

Table: Marlborough Vineyard Profitability vs Vineyard Value 2010-2020
Source Colliers Rural Valuation

Smaller wineries have been impacted by the decline of hospitality and cellar door trade in New Zealand and this is expected to continue with tourist numbers unlikely to recover in the short term.

However, despite Covid-19 difficulties, New Zealand wine exports have actually benefited from the pandemic, with more people drinking at home across the United States, the
United Kingdom and Europe, leading to an uptick in retail sales, along with increased online sales.

A report published late last year by Rabobank found Sauvignon Blanc exports were up 131 percent year-on-year to August 2020. Aided by the large vintage harvested in early 2020, wine export revenue is forecast to increase 9.5 percent to $2.1 billion for the year ended June 2021.

Indications suggest production from the upcoming 2021 harvest will be lower due to frosts in several South Island regions in September and October. This is putting upward pressure on grape prices with competition between wineries to secure fruit to meet high demand.

With increased labour costs and a high exchange rate this may squeeze winery margins, and will further highlight the importance of scale and markets in the industry.


viticulture market update

Marlborough Viticulture Market Update | February 2021

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Related Experts

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

Registered Valuer | Rural Valuation

Blenheim

Jack has a strong rural background growing up in North Canterbury where he has developed a range of skills which aid 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 across the valuation sector, which included undertaking corporate farm portfolios 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 to continue building his own portfolio of clients.  

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