Ara Wines in ‘huge land sell-off’

New Zealand’s Ara Wines is rumoured to be selling its entire 1,600 hectares of land in Marlborough to Indevin in a deal potentially worth £130 million.

The Ara wine range (Photo: Ara)

Should the alleged deal be completed, Indevin – which is New Zealand’s largest wine producer – will acquire 600 hectares of vines in the Upper Wairau as well as 1,000ha of adjoining bare land: the biggest single unplanted site in Marlborough.

It is thought that at least 800ha of the remaining 1,000ha of agricultural land could be suitable for vines, although the location – a raised flat river terrace at the far western end of Marlborough’s Wairau Valley – is subject to frequent frosts.

And while irrigation would be necessary to establish and grow vines, Ara’s estate comes with a reservoir holding up to 500,000 cubic metres of water, which can be used to supplement water piped from the Wairau and Waihopai rivers.

Ara Wines was founded in 1999 and is currently wholly owned by the Todd Corporation, run by one of New Zealand’s richest families, which has a range of business interests, in particular Todd Energy, a major player in the country’s oil industry.

It is thought that the family may have chosen to sell its Marlborough landholding due to troubles in its energy business – it has suffered from a dramatic fall in the price of oil from a peak of US$100 a barrel to around $40 today.

While the Todd family is giving up its vineyard assets, it is said that Indevin will not be acquiring the Ara Wines brand.

Rather, it is rumoured that Indevin has bought the land to secure the supply for the projected growth of Marlborough Sauvignon Blanc in the USA, particularly for the expected sales increase of Gallo brands, such as Cupcake Marlborough Sauvignon Blanc.

Chief winemaker for Ara Wines since 2011, Jeff Clarke, is thought to be leaving the company. Clarke was chief winemaker at Montana Wines/Pernod Ricard for 16 years from 1993 to 2009.

No sums have been suggested for the value of the Ara estate, but the average cost of a planted vineyard in Marlborough is currently estimated at NZ$180,000 per hectare (although this figure is still short of a price peak in 2007, when bare land was changing hands for up to $200,000/ha).

This would put the 1,600ha deal at NZ$288m, or £131.7m.

Meanwhile, grape prices in the region are steadily rising, and could hit NZ$1,800 per tonne with this vintage, up from around $1,600 last year.

Should Indevin acquire the Ara estate, and plant the extra 800-1,000 hectares, it will take Marlborough closer to reaching its natural limits for vineyard expansion, with the amount of remaining, viable vine-growing land in the region believed to total no more than 3,000 hectares (Marlborough currently has 22,907ha of producing vineyards).

Indevin, which was founded in 2003, has become New Zealand’s largest wine producer, owner, and operator of winery infrastructure in just over 10 years.

The business experienced a significant increase in its size in 2010 when the it bought, along with Lion Nathan, wine assets from Pernod Ricard NZ, such as extensive vineyard holdings in Gisborne and the Hawke’s Bay, wineries in Gisborne, and twelve New Zealand wine brands, including Lindauer and Corbans.

As part of this deal, Indevin became the owner and operator of the vineyard and winery assets and Lion Nathan became the owner and distributor for the brands.

Indevin has a stated aim to increase its production footprint with the acquisition of new vineyards and/or plantable sites.

Indevin founder and CEO, Marlborough-based entrepreneur Duncan McFarlane, has been contacted for comment on the rumoured deal, but has yet to respond.