NZ grape scarcity to push up Cloudy Bay prices

Buyers of famous New Zealand wine brand Cloudy Bay can expect prices increases later this year following the dramatically reduced 2015 vintage in the country.

Cloudy Bay Sauvignon Blanc sells for around £22 per bottle in the UK, but increasing grape prices is likely to push up prices for the famous brand

Speaking to the drinks business last week at the Chelsea Flower Show in London, where Cloudy Bay sponsored a gold-medal winning garden, Ian Morden, the producer’s estate director, said that reduced supply and increasing demand were pushing up grape prices of Marlborough Sauvignon Blanc, which in turn will effect the brand’s future pricing.

“With an average [UK] retail price of £22, we are one of the highest value wines in the UK market, but I do see prices going up as the natural scarcity starts to kick in – our last vintage was low yielding, relatively,” he said.

While New Zealand harvested a record of 445,000 tonnes of grapes in 2014, this year the tonnage was just 320,000, according to Morden, representing a drop of 28% – taking the quantity back to similar levels seen in the 2013 vintage.

Around 72% of all New Zealand’s harvest is accounted for by Sauvignon Blanc, while almost 77% of the country’s tonnage comes from one region: Marlborough, the home of Cloudy Bay.

With increasing global demand for Sauvignon Blanc from Marlborough, a region that is almost fully planted, Morden said that he was concentrating on securing the future supply of high quality Sauvignon for Cloudy Bay.

Cloudy Bay estate director Ian Morden at the Chelsea Flower Show, where the brand sponsored a gold-medal winning garden

“It has become very clear that Marlborough is not infinite – of the region’s 28,000 hectares, 23,000ha are planted, and the remaining land is not of interest to us in terms of the style of wine it would produce,” he said.

Continuing, he recorded, “So my focus has been on securing vineyards and growers, our priority is to secure supply for the next 10 years.”

Notably, he said that the pressure on supply is forcing up grape prices to such an extent that it is becoming more cost effective to buy vineyards, rather than fruit from growers.

“We are now in an era where having a higher level of self-sufficiency is important, so now it is more cost-effective to own the vineyards than buy the fruit,” he recorded.

Currently, Cloudy Bay own around 300ha of vineyards which supply around 50-60% of the brand’s Sauvignon Blanc.

The brand is also attempting to increase the supply and sales of its Pinot Noir, and last year bought its first vineyard outside Marlborough when it acquired 25ha of Pinot in Northburn, Central Otago.

This complements a 6ha lease that Cloudy Bay has in the same region, where it sources grapes from the Calvert Vineyard – a prized site that also supplies fruit for Felton Road and Craggy Range.

Morden told db that Pinot Noir currently accounts for around 5% of Cloudy Bay sales, but he was aiming to double that to 10% in the next five years.