$200,000/ha for Marlborough land

Multinational wine company Allied Domecq has paid $5.6 million for 28.2ha of Marlborough grape land.

Valued at a little under $200,000 a hectare, the land is in two blocks, one in the heart of Allied Domecq's Stoneleigh vineyards and the other on the boundary of its Kaituna block.

An Overseas Investment Commission decision sheet shows the Jacksons Rd land, planted in chardonnay and sauvignon blanc, was purchased from Giesen Wines in February.

Allied Domecq bought local company Montana and its wine-related assets in 2001 for about $1 billion, including $620 of new foreign investment.

Allied Domecq general manager, viticulture, Tony Hoksbergen said yesterday the blocks fitted well into the company's existing operation.

He said there was an "insatiable demand" for sauvignon blanc in Allied Domecq's international markets and the small percentage of chardonnay on the blocks would be converted to Marlborough's flagship variety.

A Blenheim real estate agency's viticulture expert, John Hoare, said grape-producing land in Marlborough was now going for between $200,000 and $250,000 per hectare.

Hoare pioneered the sale of farmland for vineyards in Marlborough in the early 1980s, when farmland in the Raupara area cost $10,000/ha, but bare stony land - ideal for grapes - could be bought for $5000/ha because it was not suited to livestock grazing.

Montana Wines began planting grapes in Marlborough in the early 1970s, triggering the land boom which has seen extensive switching of land use from orcharding and pastoral farming to vineyards.

The soaring land prices have previously been described by some smaller winemakers in the region as unhealthy.

Winemaker Allan Scott said the amount being paid for vineyards was a worry.

"I admit to being nervous about the bullishness of the industry, and catch a glimpse of the kiwifruit and apple industry collapse through over planting and marketing selling shortcomes," he said recently.

Not long after Allied Domecq bought Montana, Lion Nathan, a big brewer which had unsuccessfully bid for Montana, paid $52 million for 300ha owned by the Marlborough-based Wither Hills wine company, in a deal which also included a winery, label and management contracts.

- NZPA