Sour grapes as outlook poor for vineyards

Larry SchlesingerDecember 8, 2020

A price recovery in wine property is some way off, according to the August property review by valuer Herron Todd White. 

“Leading industry bodies suggest that it is likely to be at least another two years before the [wine] industry recovers,” writes Shane Noonan, director of Herron Todd White’s Mildura office in the latest report. 

Noonan quotes the 2011 Winegrape Purchases: Price Dispersion Report, which found that the average price paid for fruit delivered to the largest Australian wineries continues to decline, impacting on vineyard property values. 

The 2011 average purchase price has fallen to $413 per tonne in 2011 from $464 per tonne in 2010, $527 per tonne in 2009 and $717 per tonne in 2008. 

Mildura is the centre of the Sunraysia region in the northwest corner of Victoria, famous for its oranges and vineyards. 

Noonan writes that almost all grape variety returns in 2011 were lower than the previous depressed levels of 2010. 

Wineries are paying on average $235 per tonne for chardonnay; $188 per tonne for colombard; $307 per tonne for sauvignon blanc and up to $427 per tonne for pinot gris. 

For the main red varieties they are paying $311 per tonne for cabernet sauvignon; $278 per tonne for merlot; $285 per tonne for shiraz and $336 per tonne for pinot noir. 

The news is not much better for Mildura’s orange farmers. 

Although citrus growers have had their best crop in 20 years, they are facing significant losses due primarily to the collapse of their prime export markets, the high Australian dollar and higher production costs due to wet weather. 

Citrus exports are expected to be well below the average 50% of total yield, which has resulted in a flood of fruit onto the domestic market. 

The depressed state of the vineyard market is also noted in central NSW by David Sullivan, director of HTW’s Bathurst market. 

“Demand for vineyards remains soft, and we are aware of vineyards sales not progressing until the vines have been removed and sold for alternative agricultural lifestyle values,” he says. 

Sullivan says the regional rural market has gone into winter hibernation, with very few transactions occurring, and in general agents are reporting low enquiry levels.

“Demand for non-local investors and lifestyle buyers is still relative low, and there are limited signs these types of buyers will re-enter the market in the short to medium term,” he says. 

The Cheviot Kirribilly Vineyard Property Group’s 953-hectare South Australian vineyard portfolio is up for sale in August. It has been valued at $42 million. 

The portfolio is being sold by Colliers agents Tim Altschwager and Nick Dean by private treaty, with expressions of interest closing August 16.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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