The bad news is – if you want vines for this year and haven’t yet ordered, then you are likely to be out of luck.
In what has been a major turnaround, New Zealand’s vine nurseries, at least those that have survived, have been inundated with orders as the wine industry gears up for the near future. Back in 2009, those same nurseries hit what one owner describes as “a brick wall”. After years of exponential growth, the massive crops of 2008 and the ensuing over supply meant no one in the industry was interested in purchasing vines. Maintenance in the form of replants dried up. New developments were non-existent and the nursery business was the first to feel the pinch.
As Geoff Thorpe, Managing Director of Riversun says; “The nursery industry is effectively the seismograph needle of whatever industry we are involved in. Whenever people are really positive there is a shortage of plants but as soon as they get nervous, the first thing they turn off is new planting.”
While 2008 was one of the biggest years ever for nurseries, (due to pre orders of plants prior to that year’s vintage) 2009 was one of the worst. And it got tougher still in the years that followed.
Back in 2005 there were 30 nurseries feeding the wine industry. By 2008 that had dropped back to 25. Currently there are only five producing certified vines! (Riversun, Misty Valley, Vineyard Plants, Ormond Nurseries and Stanmore Farm).
As for staff levels, they have been decimated even further. Ormond Nurseries General Manager Ben Wickham says his company’s staff levels dropped from 70 to five . Riversun’s dropped from 60 permanents (and 250 seasonal) at its peak to nine.
Given no orders were coming in after 2008, stock that had been grafted had to be disposed of. There was no need for grafted vines, so the many rootstock blocks were ripped out and the nurseries hunkered down in the hope things would improve in the future.
That improvement began emerging mid last year, following hard on the heels of the lighter than expected 2012 vintage. And ironically, given the over supply was created by Sauvignon Blanc, the demand currently is for that exact variety, according to Thorpe.
“In the lead up to the crash Sauvignon Blanc was probably 70 per cent of what nurseries were grafting.
Post the crash, you couldn’t give away Sauvignon Blanc vines. That has now changed around to where this coming grafting season, 65 – 70 per cent of our orders are for Sauvignon Blanc again and there is going to be a shortage of vines.”
Admittedly, each of the nurseries is starting out from a very small base, given the downsizing that has occurred during the past four years. And that is not likely to be remedied overnight due to the lack of rootstock now available for grafting.
“We are severely restrained by the lack of rootstock supplies,” Wickham says. “It has been quite a transition, it’s like trying to hit top gear, when you are stuck in first. It will take us a while to get there as rootstock takes two or three years to really crank up again.”
So what has caused the major shift? There are a number of reasons, according to those involved. The lack of replanting/maintenance within vineyards since 2008, being one.
“The vine has an average lifespan of say 20 years,” Rex Sunde of Misty Valley says. “Every year about five per cent of vines, (Sauvignon Blanc at least) need to be replaced. But from 2009 to 2012, most people didn’t or couldn’t afford to replace those gaps in their vineyard. It wasn’t such a big issue when growers were facing yield caps. They didn’t need to fill those gaps in, because they were able to reach their cap without them. But all of a sudden in 2012, they didn’t reach their cap levels and those gaps among the vines became far more noticeable.”
The smaller than expected 2012 vintage, which created a shortage of supply is another reason.
“Two or three major players within the market saw they were likely to be short of grapes within the next two or three years,” Wickham says. “They could see long term that they needed to do some planting, otherwise they would be short of grapes. If the increase in demand for wine continues at 8 – 10 per cent per annum over the next three or four years, we are going to be desperately short.”
And the other reason is the overall global shortage of wine combined with increased consumer demand.
“In 2012, global production was down by nine per cent,” Thorpe says. “France alone was down 20 per cent - that is the equivalent of 200,000 of their hectares not producing. Yet there has been increased consumption, especially in North America and Asia.”
So in terms of New Zealand, the nurseries are desperately trying to regroup. But it’s not an easy task. Firstly rootstock for grafting has to be produced – which as explained before, can take years. Rootstock cuttings are currently a third of what they were in 2008.
“At the height of the industry there were between 15 and 18 million rootstock cuttings available to the nursery industry for grafting,” Thorpe explains. “Now there is only an estimated six or seven million. While that may sound like a lot, that only equates to enough saleable vines to plant around 1500 hectares a year of new vineyards and 500 hectares of replants over the next four years. For an industry of 35,000 hectares, enjoying strong growth in export demand, that is a serious constraint.”
There is one saving grace to this lack of rootstock – it means there will not be the insane speculative plantings that occurred between 2005 and 2008.
“We are seeing genuine interest from major players, not speculative interest,” Wickham says.
Most of the speculation during the 2000s centred on Marlborough, but Thorpe says there is unlikely to be a repeat of that planting frenzy.
“There is just not the land and water availability for many more of those large scale developments in Marlborough, and besides the major banks are likely to be much more cautious this time around.”
Which means some growers and wineries are now looking outside of Marlborough for future developments. Sunde says they have received enquiries for a significant order for Sauvignon Blanc for a new development planned in Hawke’s Bay. Gisborne is another that is showing signs of growth, driven by Indevin and Lion Nathan for their Lindauer brand. And while Sauvignon Blanc makes up to 70 per cent of current vine orders, there is also a lot of interest in Pinot Noir, Chardonnay and Pinot Gris.
Looking forward – nurseries are warning growers and wineries to be prepared to wait. Orders for certain varieties this winter are already full. There are waiting lists with most companies for 2014. If those tentative orders are confirmed, then the next date available for new orders will be winter 2015. That’s a situation the wine industry hasn’t faced since the late 90s.
Wickham says all the nurseries are cautious about the surge in demand, especially given the tough times of the past.
“We never want to go back to that 2005 – 2008 situation. We are much more cautious now and we will be producing to orders only for the next five to 10 years. We won’t be cranking up to full steam as we were in the heyday. We want to do what we can do and do it well.”
Thorpe puts it even more succinctly; “We are older, wiser and battle scarred. None of us is going to go crazy.” ν
