NZ wine stats
The wine industry has endured a tough few years, but
those tough times appear not to be over just yet. Agribusiness
editor Neal Wallace reports overproduction of grapes and
plummeting asset values will force vineyards and wineries to
amalgamate, and some to fail.
Call it an inevitable rebalancing or a correction, but the
speed with which the growth of the wine industry has come to
a halt can only be called spectacular.
Its glamour, mystique and romance attracted a torrent of
investor interest, and while the industry could not be
considered a train wreck, observers say some vineyards and
wineries will be forced to close, and others to amalgamate.
The New Zealand Herald recently reported 134 vineyards
were for sale, including 29 in Otago, 55 in Marlborough and
17 in Hawkes Bay.
The industry is not yet at the stage of ripping out vines,
but some owners have mothballed blocks and bigger wineries
have withheld wine from sale until prices recover.
The average grape price over all varieties fell from $2161 a
tonne in 2008-09 to $1629 last season and was forecast to
fall to $1293 next season.
In 2006, it was $2022.
It is a story of remarkable growth, planted areas having
grown from 5900ha in 1985 to close to 33,000ha today, and the
volume of grapes crushed from 78,000 tonnes to 285,000 tonnes
in that same period.
But a perfect storm of the global economic crisis curbing
demand, continued growth, and land values in some parts of
the country halving has depleted profits, weakened balance
sheets and caused several receiverships.
In May this year, pioneer Otago vineyard Gibbston Valley
Wines went back to shareholders seeking a second capital
injection of $2.5 million, after recording $2.64 million in
losses in the previous two years.
Two years ago, Vintners Winery in Cromwell was placed in
receivership owing $7.2 million, and in May last year,
William Hill Winery faced a similar fate, owing more than $5
million.
Marlborough in particular is being hit hard by the
correction.
Last month saw the collapse of Awatere Vineyard Holdings and
Awatere Vineyard Estates, contract grape growers to Villa
Maria and Montana, which reportedly owe at least $24 million.
The deterioration in the industry's economics was illustrated
by the New Zealand Wine Company's recording a $1.9 million
loss in the year to June 30 on the back of a $1.2 million
profit a year earlier, after what it described as the most
challenging year in two decades.
Revenue increased $500,000 to $13 million, but shareholders'
equity fell by $3.3 million to $18.63 million due in part to
a 13% fall in market valuations of vineyard and winery
assets.
The Ministry of Agriculture and Forestry forecast exports in
the year to June 30 of 145 million litres, a 30% increase in
volume, but the estimated value of $1.1 billion for those
exports was only 11% higher than the previous year, the
average price per litre falling from $8.70 in 2008-09 to
$7.50 this past year.
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