Raising a glass to the next vintage
With the 2014 grape harvest long over, growers have been busy investing time and money in their new crop. But with a repeat of this year's bumper harvest unlikely, what can they expect in years to come? Wine reporter Chloe Winter investigates.
Grape growers dedicate their lives to their vineyards. Hours upon hours are spent monitoring the vines, tending them at bud burst, protecting them from frost and ensuring they are progressing as they should. After all, it's their livelihoods hanging on the vines.
This year, the average 30-hectare Marlborough vineyard raked in an impressive $368,800, or $12,290 per hectare, up 25 per cent on last year - a nice pay packet for some.
However, with a repeat of this year's bumper harvest unlikely, according to the industry, what can growers expect?
According to the latest Viticulture Monitoring Report, released earlier this month by the Ministry of Primary Industries and New Zealand Winegrowers, it is estimated there will be a 22 per cent fall in profit next year from $368,800 to $289,370 - a drop of $2640 per hectare.
"In the year ahead Marlborough growers are not expecting the 2014 ‘super' yield season to be repeated, and are budgeting for average yields to drop 10 per cent," the report says.
Marlborough vineyards averaged 14.6 tonnes per hectare this year - a 20 per cent increase from the average yield in 2013. Next year, this figure is expected to drop.
The average grape price, per tonne, this year was $1730 and is expected to remain at that price heading into the 2015 vintage.
New Zealand Winegrowers chief executive officer Philip Gregan says 2014 has been a "pretty good year" for most Marlborough grape growers.
"Clearly there was a yield influence but our grape prices were firm and that's led to good strong income flows for many growers.
"We are starting to see some reinvestment, replanting, capital equipment and the odd expansion coming though, all positive signs of the industry."
However, Marlborough grape growers are realistic, and not expecting a repeat of this year's record 329,572-tonne harvest, Gregan says.
"I wouldn't have thought anybody would be expecting two harvests of that size. We certainly saw it as a one-in-20-year event . . . it wouldn't be good business practice to plan on the basis of a vintage that size every year and everybody needs to be aware of that."
Marlborough's record harvest was "aided by increases in the yield cap accepted by some wineries, a wider band of accepted yield if quality parameters were met and some instances of alternative customers buying excess fruit", the report says.
Favourable weather conditions in December 2012 and December 2013 also helped as they led to higher bunch numbers, resulting in large potential crop this year.
"Wineries and growers were well aware of the potentially high yields."
On the 25 vineyards surveyed for the report, sauvignon blanc yields ranged from 9.8 to 23.1 tonnes per hectare. "This significant increase in the predominant variety's yield was the main reason for the overall increased yield," it says.
At harvest, many wineries enforced contracted yield caps and a common sight in many vineyards was an area of fruit left behind once the target had been reached. Fruit was either harvested directly to the ground or left unharvested.
However, two significant rain events in April also had an effect on harvest, creating havoc for growers yet to harvest their crops.
Vineyards in the Awatere Valley took the brunt of the inclement weather, while many vineyards in the Wairau Valley have reported to have come out of it practically unscathed.
"A large part of the regional crop was safely harvested before the second rain event, but the rain made conditions difficult for the later harvested areas," the report says.
Total rainfall for April was recorded at 146 millimetres - nearly three times the long-term average.
Gregan says there are clearly upsides and downsides to working in the wine industry.
"There was an upside this year in terms of crop size and a downside this year with rain, but who knows what the next two or three years will bring.
"You never know what the weather gods are going to deliver - what they give one year, they can take away in another year. That's part of the agricultural risk the industry has to deal with."
Despite the unwanted rain, winemakers are confident the 2014 vintage will produce great quality wines.
The industry continues to remain positive and focused heading into 2015, Gregan says.
The rise in development expenditure proves that and reflects a return to vineyard expansion in Marlborough.
Development expenditure for the average 30ha Marlborough vineyard was budgeted at $43,900.
"Industry commentators noted that growers are gradually emerging from some difficult years and there are signs that new vineyard developments including new vineyard planting are being increasingly planned in the region.
"Three growers in the survey indicated they are considering purchasing additional vineyard area in an attempt to increase economies of scale."
For the first time in four years, vineyard working expenses increased, now sitting at an average of $9643 per hectare.
Labour expenditure also rose from $3847 per hectare in 2013 to $5177 in this year. Canopy management was the main contributor to the increased labour expenditure item - up 91 per cent, reflecting the large crop and the major expenses associated with crop reduction.
Manual pruning expenditure cost vineyard owners $40 per hectare less than 2013. Frost protection expenditure was also down, because of a small number of frosts.
Expenditure on weed and pest control rose 17 per cent this year totalling $817 per hectare.
"The number of spray rounds was higher than the previous year due to the larger crop leading to more disease pressure from botrytis and powdery mildew," the report says.
"For several growers there was also a requirement to apply expensive chemicals to combat the increasing incidence of mealy bug in the district."
Most expenses are expected to remain similar to last year's.
The report also showed combined debt of more than $1 million between the 25 growers. While some had paid all their bills, others had debt servicing expenses ranging from $100 to $14,000 per hectare.
However, there has been a continuous effort from growers to reduce debt where possible with repayments of $68,800 made in 2014, up from $58,100 in 2013.
Marlborough growers recognise there is a fine line between supply and demand but are "cautiously optimistic about the future of their businesses" because of the good demand for New Zealand wine, the report says.
Gregan said next year's income will be determined by yield.
"If that were to drop significantly clearly that would have an impact on the gross profit of vineyards, he says.
"But the numbers this year were clearly quite healthy so even if the yields were to drop to normal levels there wouldn't be any concerns about profitability."
Overseas markets will continue to show strong demand for the region's wine, he adds.
"We still see really solid demand growth in all our key export markets and that's the outcome I picture."
"Clearly the situation going into vintage 2014 was that the industry had seen strong sales. There had been the smaller 2012 vintage and then 2013 had been bigger, but there were still some clear-cut demand going into 2014. There was, quite obviously, a winery appetite for a large harvest.
‘It's going to be really interesting with the outcome for vintage 2015."
The Marlborough Express