Contract growers hold off signing contracts

BY RACHEL YOUNG

Some contract grape growers are holding off signing contracts due to prices they describe as "pathetic" being offered by wineries this year.

Word in the industry is that 2010 sauvignon prices average around $1200 to $1500 a tonne, compared with an average of $1650 last season and highs of about $2400 in 2008.

Contracts include penalty clauses that give companies an out in scenarios including fruit with low brix (sugar) levels, the presence of rot, and growers producing more grapes than they are contracted to grow.

The international success of Marlborough sauvignon blanc triggered large-scale plantings in the region, but in the past two years unprecedented large vintages have sparked a reversal of the supply-demand ratio.

After 2008's record 285,000-tonne harvest, most wineries tightened up grower contracts, while some growers without contracts were left unable to find buyers.

One contract grower, who would not be named, has been offered $600 a tonne for his sauvignon blanc grapes, with a restriction of 12 tonnes per hectare.

"It's a pathetic offer. I know we are in tough times, but this was below our cost."

Last year, the same winery paid him $1500 per tonne, with the same per hectare limit. The grower is now in "discussions" with the winery to work out a better deal.

Another contract grower said he was holding off signing his long-standing contract until a better price had been reached, as what he had been offered was "bugger all".

He estimated a profit margin of $200 if he was paid the maximum current offer of $1200 per tonne for his sauvignon blanc grapes. However, this maximum would be paid only if his grapes reached a level of 22 brix and had less than 5 per cent rot, and the crop was restricted to 12 tonnes per hectare.

If the brix dropped, so would the price. For example, if the brix was 20.5 to 20.9, then the price per tonne would be $1000.

Another grower, who would not be named, said he had been told by the winery he contracted to that it would not take his grapes this year. "I'm crossing everything that is crossable and just hoping." He said any contract would be welcome, as it was better than nothing.

Another contract grower said indications were that his sauvignon blanc grapes would fetch $900 to $1200 per tonne.

To reduce yield and the chances of excess grapes, the vineyard owner had tied down two and three, rather than the usual four canes.

"It's a break-even scenario. We're not making any money."

Requirements included a level of 21 brix (sugar level), maximum 10 tonnes per hectare and no more than 5 per cent rot. If these were not met then the price dropped to the lower end of the scale.

A quality bonus was awarded if the flavour profile fitted what the winemaker wanted.

A contract grower for a large winery said he was offered $1300 per tonne of sauvignon blanc with a maximum intake of 10 per hectare. He had not signed his contract yet.

Another grower, who supplies two wineries, was being offered $1600 per tonne of sauvignon blanc grapes with a strict 9.6 tonne per hectare clause in place while the other winery was still to confirm its price.

Saint Clair Family Estate director Neal Ibbotson said his pricing was based on the district average, however the winery would pay a premium for quality grapes while substandard grapes would be penalised. He said indications showed grape prices were likely to fall lower this year.

New Zealand Winegrowers chairman Stuart Smith said the industry body did not get involved with grape prices between growers and wineries. Those without contracts who played the spot market had previously done very well but it was always a gamble.

The New Zealand Winegrowers statistical annual for 2009 listed 568 grapegrowers in Marlborough.

Sauvignon blanc grower's tale:

2010: $1200 maximum with 10 tonnes per hectare

2009: $1250 with 12 tonnes per hectare

2008: $2400 with a quality bonus of $200

Another sauvignon blanc grower:

2010: $1200 maximum

2009: $1800

2008: $2300

- The Marlborough Express