Financial Factors
Revenue
Prices for grapes remain stable and returns to growers buoyant. Due to a recognition by both growers and winemakers that the highest possible quality must be achieved in the vineyard, many wineries are awarding bonuses.
In some cases, guaranteed returns per hectare are negotiated to permit growers to more stringently regulate crop with imposed additional management techniques, which improve and guarantee consistent grape quality each season without loss of revenue.
Expenditure
Costs of vineyard establishment remains high, at over $25,000/ha, exclusive of capital investment in water resources and reticulation, drainage, machinery, bird control, ancillary buildings etc.
Shortages of nursery stock have lead to two year waiting lists for grafted vines from many nurseries and in some cases, a price rise for plants from $4.50-$5.00/plant. This has effectively increased the cost of establishment by $1,000/ha or more.
Net Result
Interest in investment in the industry is growing rapidly, particularly from overseas investors. Most of this investment is focused at large proposed vineyard developments, both syndicated and stand-alone.
The low value of the New Zealand dollar is fuelling this interest, along with the growing recognition of New Zealand wine in world markets.
Source: "Vineyard Profitability", Neal Ibbotson, Primary Industry Management, Vol 3 No 2, June 2000
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