Ferment, July 2010

Ferment, July 2010

July 12, 2010 0 By IWM

The news that a Hawke’s Bay winery has gone into receivership with debts of $20 million came as a surprise. It was no surprise that the winery found itself unable to continue in the current economic climate because that has happened to a number of businesses and not just wineries. But I was amazed that the scale of the debt was so large.

At Wellington’s 2010 Pinot conference we were implored to stop referring to NZ’s wine industry and to use a more suitable sympathetic way of describing the trade. Unfortunately, an industry is just what the vineyards and wineries of NZ have become. NZ lacks the heritage and history of established European wine regions, where chateaux, domaines, and estates are handed down through the generations. Although many seek capital or outside investment to develop, update or expand their businesses, the creation of brand new estates carrying huge levels of debt would be an exception, not the norm.

However those wishing to make wine in NZ have only to find a large fund of money, some suitable land and a willing winemaker to realise their dream. And most seek to finance their vision by borrowing from banks or other financial institutions. So immediately you have the creation of wine businesses.

Coupled to this has been the relentless message from NZWG that New Zealand could not keep up with demand overseas for sauvignon blanc. No barrier to entry, available finance and a ready market for your product? Certainly sounds like a sound business plan. But this rush to expand the vineyard area, the growing number of wineries operating in NZ and the increasing volume of wine produced has created an industry :

in·dus·try

  1. organized economic activity connected with the production, manufacture, or construction of a particular product or range of products

The production of sauvignon blanc from highly mechanised, irrigated, fertilised, high cropping vineyards has turned NZ into the very definition quoted in the dictionary, ie. an organised commercialised operation. True, there are a number of artisan producers making exceptional wines that speak of sense of place, wines with structure and potential. But to pretend that the bulk of NZ wineries fall into this category is wrong. As is it to put the blame onto the banks and institutions who lent the money in the first place. Wine is not essential to life, however much we may think it is and no-one has to plant a vineyard.

Those attracted to the romance and ‘lifestyle’ of owning a winery must have had a business plan or else a very persuasive argument for their bank manager.