Marlborough ‘end game’ now in play

Land for vineyards in Marlborough is now becoming so scarce that an “end game” is in play to acquire the best remaining sites, believes the estate director of Cloudy Bay.

Ian Morden, estate director of Cloudy Bay

“We have reached the zenith and there’s an end game going on in terms of acquiring the best sites,” said Ian Morden speaking the the drinks business at the RHS Chelsea Flower Show last week, where Cloudy Bay has a garden.

Of New Zealand’s 36,192 hectares of vineyards, 24,020ha is planted in Marlborough, the majority being Sauvignon Blanc. Total plantings are  expected to increase by just over 1,000ha to 25,119ha by 2018.

“Land prices are going up and land for Sauvignon Blanc is becoming scarcer,” adds Morden. “All of that points to the value, which is where I think the future is going. It’s a really exciting time to be making wine in New Zealand. There won’t be anymore land unless we explore new parts of the country. Established regions are becoming planted out”.

“I think it’s very positive for the industry. I think it will push our some of the lower end and commodity players who rely on excess capacity in the system and bulk wine and it will force us to become more efficient in the way we use the land”.

Pointing toward the current “tractor-width” of space between vines in many of the country’s vineyards Morden said: “Lots of land is wasted if you compare it to the rest of the New World,” said Morden. “We will have to use our land more efficiently and plant more closely.”

Last year the cooler 2015 growing season resulted in reduced crops and a limited supply of Sauvignon Blanc, prompting Morden last year to warn of a shortage and possible price increases. This year, a good 2016 harvest means there will be enough wine to meet demand.

However as demand continues to grow it will reach a point where demand exceeds supply, regardless of varying harvest yields. Maintaining the value and quality of its wines, rather than increasing yields to sate growing demand, is where New Zealand should be focusing its efforts, believes Morden.

“The biggest economic lever you have in the wine world is yield,” he said. “There’s always a temptation to stretch that to improve economics, but that’s a short term gain and long term loss for brand New Zealand”.

The US is currently the fastest-growing market for New Zealand wine, increasing its value by 13% to NZ372.2 million in 2015, which Morden described as “quite phenomenal”. He also noted positive growth in emerging markets of Mexico, the Nordics, and Italy.

“We are seeing increased demand particularly in the US for to the point where I think demand will exceed supply, and that will drive prices up. China hasn’t really started yet. When that generation of Chinese consumer starts looking for something different to classic Bordeaux we are really going to run out of capacity. That’s exciting, but it is limiting. It means we have to focus on quality and value. That’s our strategy. It’s about value.”

The total value of New Zealand wine exports reached NZ$1.42 billion in 2015, an increase of 7% on 2014, according to NZ Winegrowers 2015 report. However the average price per litre decreased to $8.23/l, a 1% drop on the previous year,

Australia and Germany were the only markets to report a decrease in export values, down 5% and 31% respectively, with the remaining top 10 markets all in growth.

Cloudy Bay’s fourth RHS Chelsea entry was designed by landscape gardener Sam Ovens. The garden was intended to mimic New Zealand’s wild terrain and evoke notions of “escape”.

As regions become increasingly planted out, Cloudy Bay has sought to expand its holdings throughout New Zealand, and further beyond Sauvignon Blanc, strengthening its Pinot Noir projects.

“Cloudy Bay had been making Pinot Noir since 1990”, explains Morden. “The winery was founded in 1985, which was only four years later. There wasn’t a commercial release until 1994 (from Marlborough). Since then, because we are a young country, we have been exploring our best sites in Marlborough and Central Otago for growing Pinot Noir. It’s very difficult grape and is very site specific. There’s no substitute for time and experience. You have to take the time to discover the best places.”

In the early 2000s the producer bought its Barracks vineyard in Marlborough, specifically for Pinot Noir production.Overall, Central Otago has just 1,951 hectares of vineyards planted, compared to Marlborough’s 35,859, indicating room for growth. In 2010 the producer bought its Northburn and Calvert Vineyards in Central Otago, which has 90ha of Pinot Noir and 30ha of Sauvignon Blanc.

The 2014 vintage of Te Wahi is the first to be produced from Cloudy Bay’s Calvert and Northburn vineayrds in Central Otago

“Compared to Burgundy a big holding is 10 hectares,” said Morden. “What you have is this wonderful opportunity to grow good Pinot at reasonable scale reliably year in year out. Burgundy is wonderful when its great but its small, beautiful and complex. We have the opportunity to make really good Pinot in a way that hasn’t been done before.”

With land in established cool climate Pinot Noir regions becoming increasingly scarce and expensive, New Zealand presents a promising opportunity for producers, says Morden.

“In New Zealand land is around €120,000 to €150,000 per hectare, which I think is cheap. You have to think in the long term.”

In comparison, one hectare of a premier cru Pinot Noir vineyard in Burgundy can cost in the region of €650,000.

The first wine to be released from its Calvert and Northburn Vineyards in Central Otago is the 2014 vintage of Te Wahi – a 100% Pinot Noir fermented in stainless steel tanks with wild yeast before being lightly presses and aged in French oak barrels for 14 months.

In Central Otago and at our Northburn vineyard it’s about getting the best of the vines as they age,” said Morden. “And as they age we are finding the Pinot Noir is getting better and better.”