Foreign flavour

Many of our top wine brands are overseas owned, but that’s not such a bad thing.

Overseas companies control about 40% of New Zealand’s wine output, according to a Westpac report last year. Of our 17 largest producers (defined as having annual sales exceeding two million litres), nearly half are overseas owned.

Does foreign investment benefit the industry? The injection of funds and technical expertise can help wineries boost their quality and output, and foreign liquor conglomerates have also given New Zealand wine global distribution. Philip Gregan, chief executive of NZ Winegrowers, likes to point to Cloudy Bay, founded in 1985 by Australian David Hohnen and now part of the LVMH luxury goods conglomerate. “How would anyone rate its contribution to the New Zealand wine industry? Outstanding.”

Today, of the four largest wine producers in New Zealand, three are overseas-owned: Melbourne-based Treasury Wine Estates owns Matua and Shingle Peak; Paris-based Pernod Ricard owns Brancott Estate, Church Road and Stoneleigh; New York-based Constellation Brands owns Kim Crawford, Nobilo and Selaks.

The only New Zealand-owned winery with a similar annual turnover is Delegat, which owns Oyster Bay. The company is listed on the NZX but it is still controlled by the Delegat family.

Many overseas private investors have also bought into the industry. Well-known producers that are partly or fully foreign-owned include Craggy Range, Dry River, Escarpment, Felton Road, Framingham, Grove

Mill, Martinborough Vineyard, Mt Difficulty, Nautilus, Sacred Hill, Te Kairanga, Trinity Hill, Vavasour and Whitehaven.

Treasury bought 566 hectares of land in Marlborough in 2016, and Constellation Brands snapped up 400ha between 2014 and

2016. Despite the worries of some local producers that such firms will promote New Zealand as a source of “commodity” sauvignon blanc, a recent strategic review by consultancy PwC found that foreign-owned wineries pay their growers more for grapes than local wineries and are less likely to export their wine in bulk (unbottled) than New Zealand producers.

With climate change expected to negatively affect the relatively warm wine regions of Australia and California, New Zealand’s cool, coastal vineyards are increasingly seen as a good place to invest. However, the Overseas Investment Amendment Act 2018 tightened foreign ownership rules, leaving overseas wine producers more reliant on local vineyard owners, including commercial investment groups and mum and dad investors.