$70m will double the cheer

Delegat’s managing director Jim Delegat shows off an artist’s impression of the new winery. Picture / Paul Estcourt

The bulldozers have descended on the Wairau Valley as winemaker Delegat's Group begins construction of a $70 million winery that promises to double the exporter's production and create 40 new jobs in Blenheim.

The building of the winery puts to work money raised in a $35 million capital notes programme set up by Alternative Exchange-listed Oyster Bay Marlborough Vineyards in June.

Oyster Bay is the main wine label for Delegat's, a family-owned company that has a 33 per cent stake in Oyster Bay.

The new winery will be the main production centre for the Oyster Bay brand, able to produce 20 million litres of wine a year.

Construction is expected to take 18 months.

Delegat's managing director Jim Delegat was confident the global market would drink up the company's increased output.

"New Zealand is barely 8 per cent of Australia's productivity and the super premium category continues to grow in excess of 5 to 8 per cent annually," he said.

"The industry, at the moment, is enjoying buoyant global sales. The world has discovered New Zealand wine."

Surrounding the winery are 400ha of vines that were planted over several years and are productive.

"These plantings have been predicated on the basis of continued global demand," said Delegat.

The wine industry produces about 200,000 tonnes of grapes annually, with about half of that coming from the Marlborough region.

The new winery represents one of the larger investments made in the industry in years.

However, other grape-growers are investing to meet the burgeoning international appetite for New Zealand wine.

Villa Maria, which joins Delegat's as the other major independently owned winemaker in the country, has just completed a multi-million-dollar winery in Mangere.

* Bloomberg reports that local winemakers will be entitled to a tax rebate on sales in Australia from next year after an agreement between the two Governments.

Ministers meeting in Queenstown have agreed to extend Australia's wine equalisation tax rebate treatment to New Zealand producers.

Australia granted its winemakers a A$290,000 ($308,400) rebate for the first A$1 million of sales, to support small operators in the industry.

Local grape-growers said that gave their Australian rivals an advantage and breached the 21-year-old CER free-trade agreement between the two nations.

"It was extremely concerning for our small exporters," said Philip Gregan, chief executive of New Zealand Winegrowers, an industry body.

"We are absolutely delighted. It's fantastic news."