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Weilong Grape Co, one of the biggest wine producers in China, has announced the sale of 320 hectares of Australian vineyards for AUS$143 million (RMB 660.6 million).
Weilong is China’s third largest wine producer and the country’s biggest organic winery.
The company announced plans to sell its vineyard holdings in Coomealla and Nyah in Murray, which account for 76% of its total wine production in Australia, as reported by Vino Joy.
According to a statement released by Weilong on 6 July, the sale will “alleviate its financial and managerial stress for its Australian subsidiary”.
But for Weilong Grape Co, punitive tariffs’ financial weight has proved too heavy.
This marks the first major selloff from a Chinese company heavily restricted by these tariffs from selling Australian wine back to the Chinese market.
The Shandong-based wine producer bought the vineyards between 2016 and 2018, when international relations were friendly, China was Australia’s most profitable export market.
Weilong purchased approximately 600 hectares of vineyards in Victoria and New South Wales, according to Vino Joy, building a 26,000-tonne capacity winery just south of Mildura.
As disclosed to the Shanghai Stock Exchange, the sale includes 167.6 ha of vineyards in Coomealla and 260.4 ha in Nyah, along with other associated assets, for AUS$26.6 million and AUS$44.4 million each.
International demand for New Zealand wine shows no sign of slowing, with total export value reaching a record $1.83 billion according to the 2019 Annual Report of New Zealand Winegrowers.
Export value has risen by 6% in June year-end 2019, and at a retail level, this translates to over $7 billion dollars of New Zealand wine sold around the world annually. The UK and USA led the growth, with the USA continuing to be New Zealand wine’s largest market with over $550 million in exports.
The premium reputation of New Zealand wine has translated to real value in its major markets where the country remains either the highest or second-highest priced wine category in the USA, UK, Canada, and China. “This year’s export results again reflect the New Zealand wine industry’s strengths, and reinforce our international reputation for premium, diverse and sustainable wines.” said John Clarke, Chair of New Zealand Winegrowers.
The report highlights the completion of the 2018 PwC Strategic Review, the first within the industry since 2011, which provided a wealth of usable insights into the state of the New Zealand wine sector, challenges and opportunities. “The Strategic Review report noted the continued steady growth of the industry, and identified a range of challenges and risks that need to be addressed to maintain that trajectory and ensure all members have the opportunity to benefit” said Mr Clarke.
Mr Clarke noted the Strategic Review underscored how important all aspects of sustainability were in order to maintain the New Zealand wine industry’s social license to operate. “As an industry, we need to ensure our key focus is on enhancing sustainability initiatives. Sustainability is a cornerstone of the reputation of New Zealand wine, and is vital to the ongoing success of our industry.”
Highlights over the last year include the completion of the first phase of the Bragato Research Institute’s climate change programme, the commencement of a new research winery facility, and the International Sauvignon Blanc Celebration, which saw over 100 international wine producers, experts and key influencers visit Marlborough to experience New Zealand’s diverse Sauvignon Blanc offerings.
The 2019 Annual Report can be accessed here.
For further information contact: Philip Gregan CEO, New Zealand Winegrowers 021964564
Editor’s note: • Wine is New Zealand’s sixth-largest export good. • New Zealand wine is exported to more than 100 countries.
The beer and wine aisle of a 365 by Whole Foods Market grocery store is pictured ahead of its opening day in Los Angeles. New Zealand sauvignon blanc has found a ready market in the US.
New Zealand’s wine export values continue to rise thanks to strong United States demand, reaching $1.66 billion for the year, up 6 per cent on the year before.
While the percentage increase is lower than the average yearly growth of 17 per cent for the last 20 years, the industry was still on track to reach $2b worth of exports by 2020, chairman of New Zealand Winegrowers Steve Green said.
The latest NZ Winegrowers annual report shows to the end of June this year, the US market is worth $517 million, up 12 per cent. New Zealand wine became the third most valuable wine import into the US, behind only France and Italy.
NZ wine, a 2017 snapshot.
Green forecast next year’s export volumes would be “more muted” because of the smaller harvest of 396,000 tonnes, down 9 per cent on 2016, but wineries were confident quality would remain high.
While the US provided the best returns, more litres of wine (74 million) were exported to the United Kingdom for a much smaller return of $389m. Traditionally more bulk wine has been sent into the UK market. Behind the US and the UK came Australia, Canada, the Netherlands and China.
Former US ambassador to New Zealand Mark Gilbert, along with many of his countrymen, has a nose for a good wine. He attended a tasting of New Zealand and French pinot noir last year.
The most exported variety was sauvignon blanc, followed by pinot noir and chardonnay.
The recently passed Geographical Indications (Wine and Spirits) Registration Act would offer improved protection of New Zealand’s regional identities. The industry had also launched the sustainable winegrowing New Zealand continuous improvement extension programme to enhance the reputation of wines.
Of a total growing area of 37,129 hectares, sauvignon dominates at 22,085 ha, an increase of 685 ha from the year before. The second most popular variety was pinot noir, with 5653 ha, followed by chardonnay at 3203 ha and pinot gris (2469 ha).
Marlborough is overwhelmingly the largest region with 25,135 ha planted in vines, followed by Hawke’s Bay (4694 ha), Central Otago (1896 ha) and Canterbury/Waipara (1425 ha).
The number of wineries was 677; they reached a peak of 703 in 2012.
New Zealanders drank 40 million litres of imported wine during the past year, most of it Australian (29m litres), with the next two most popular French and Chilean.
The November Kaikoura earthquake damaged an estimated 20 per cent of Marlborough’s tank capacity, but by harvest time all of the lost capacity had been restored or replaced.
Green said the industry consulted with members on possible changes to export tasting requirements, with responses suggesting a rethink of export requirements was needed.
“We continue to believe more needs to be done in our export legislation to ensure that the same standards apply to every bottle of New Zealand wine, no matter where it is bottled,” Green said.
NZ Winegrowers were concerned at the Ministry for Primary Industries’ plan to take part of New Zealand Winegrowers’ wine export certification service contract in-house.
“We fought hard to retain the status quo, which has served our members well, and are disappointed with the level of industry consultation in MPI’s decision making process. If the service changes, we will be seeking guarantees from the government that the current speedy issuance of export eligibility statements will be protected, at no additional cost to members,” Green said.
In June the New Zealand Grape Growers Council and the Wine Institute of New Zealand finished as entities, replaced by a unified New Zealand Winegrowers.
New Zealand is now the only major wine producing nation with a single industry body, representing and advocating for the interests of its entire grape and wine industry.
The industry and the Government are working through a Primary Growth Partnership on research into lighter wine production and marketing. Last year retail sales reached $33.5m. The programme runs through to 2021, by which time $16.97m would have been spent on the partnership.
Organic wine production continues to flourish with more than 60 New Zealand wineries now making fully certified organic wines, and more still in the organic conversion process.
Wine exports to China have the potential to rise in value from a current $25 million a year to $150m in just eight years.
New Zealand Winegrowers says the target is aspirational, but consistent with the rise in wine exports to Asia generally in the last few years. Wine exports have risen five-fold from $20m in 2005 to nearly $100m this year.
The growing importance of China to Kiwi winemakers is why New Zealand Winegrowers is opening its first Asian office next week, based in Hong Kong. Asian marketing manager Monty James said the move had been desirable for some time, but the clincher was a recent industry review by PWC, which highlighted the need to be present in growth markets.
“Coupled with that, China has gone from being a small player in New Zealand wine to the number one [in Asia] by some margin and continues to grow. It grew over 50 per cent in the last financial year.”
New Zealand Winegrowers already has offices in London, New York, San Francisco and Melbourne, and the Asian office is expected to service other markets in the region. But there’s little doubt China is its main focus, a market which till now has been forged by the efforts of individual winemakers or through big-label parent firms. Experts in the field have stressed the need for Kiwi wineries to take a less fragmented approach and James says the Hong Kong office is the beginning of that broader effort.
It is being assisted by a $1.5m contribution from New Zealand Trade and Enterprise next year towards building the Kiwi wine brand in China and mainland Europe. Hopes are even higher for Europe. The New Zealand Winegrowers-NZTE growth target for wine exports to Germany, Sweden and the Netherlands is $225m by 2020, well up from its present $45m.
James said the Government’s involvement in marketing New Zealand wine was critical, “because our competitors . . . are going into China with significantly more and government-driven money”.
