Earthquake damage to Marlborough wine industry likely to top $100m

Marlborough wine companies are busy claiming insurance to cover losses from the 7.8 magnitude earthquake.
DEREK FLYNN/FAIRFAX NZ

Marlborough wine companies are busy claiming insurance to cover losses from the 7.8 magnitude earthquake.

Winery damage from the 7.8 magnitude earthquake is likely to exceed the $100 million price tag of the Seddon earthquake three years ago.

The Marlborough wine industry was hit hard by the most recent earthquake, losing millions of litres of wine and sustaining damage to more than 1000 tanks.

This amounted to 20 per cent of total storage capacity in the region, sending wine companies scrambling to empty the tanks and get them repaired or replaced in time for harvest next March.

Trevor Burkhart

Burkhart Estate co-owner Trevor Burkhart shows the damage done to his vineyard, south of Blenheim, by the magnitude 7.8 earthquake.

​A wine industry insurance specialist said the effect of the November 14 earthquake was more wide-reaching than the Seddon earthquake, which he estimated caused $100m in damages.

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ICIB managing director Garry Mooney said while it might seem like a lot of money, the cost of the earthquake to the industry paled in comparison to the damage in Wellington.

Wineries are trying to empty damaged tanks in time for harvest.
DEREK FLYNN/FAIRFAX NZ

Wineries are trying to empty damaged tanks in time for harvest.

"From an insurance perspective it's not a huge loss, in Wellington you're talking between $1.5 and $3 billion, a single building could cost $100 million," he said.

"But it's going to be more expensive than last time, that's to be expected given the number of wineries damaged and the lower natural disaster excesses."

When the Seddon earthquake hit three years ago, insurance excesses for natural disasters was set about 5 per cent, however this had dropped to 2.5 per cent.

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The excess related to the overall value of the winery, processing equipment and any stock at the location, so for a winery with a $10m price tag, the company would have to pay an excess of $250,000.

Mooney said some wine companies had put in more earthquake-resilient tanks following the Seddon earthquake, which had helped to reduce tank damage this time around.

The full extent of the cost would not become apparent until after vintage, as wine companies were claiming insurance to fix tanks in time for harvest, however these might have to be re-assessed.

Mooney said in the majority of cases insurers were letting wine companies get on with repairing or replacing tanks and not wasting time getting quotations, which would be settled once they exceeded the excess.

It was in the best interest for both the insurers and wine companies to have repairs completed as soon as possible not only to reduce claims costs - as wine companies would be able to claim loss of income if tanks were not repaired in time for harvest - but also for the winery to be operational and maintain their markets for vintage 2017, he said.

New Zealand Winegrowers chief executive Philip Gregan said on Tuesday the industry should be in a position to process a normal sized harvest next year.

Wine companies were freeing up capacity by sending wine to the North Island, bottling early and bringing in temporary storage to make sure they could take enough fruit.

 - The Marlborough Express

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