Prime Movers sector report: Grapes

By ROSE MANNERING

Mal McLennan is an optimist. He believes with good marketing, and "looking outside the square", the grape industry has a good chance of finding markets for all the grapes already in the ground.

McLennan has been growing grapes from his family property in Meeanee, Hawkes Bay, for the past 10 years.

He has been part of the phenomenal growth in the viticulture industry in recent years; in 1995 there was a planted area of 7500 hectares, but by this year the area of grapes in New Zealand had grown to 19,000 ha. The 2001 grape production of 118,000 tonnes is expected to climb to 200,000 tonnes in 2007.

Frost damage reduced the national crop from an anticipated 130,000 tonnes last season to just 76,000, which resulted in short supply of grapes last season.

McLennan firmly believes a team approach by grape growers and wine companies will go a long way towards combating the difficult times ahead.

"The last thing we need is growers versus processors, in a union-type situation," he says. In mid-August he stepped down from the presidency of the Hawkes Bay Grape Growers' Association to concentrate his efforts on the Winegrowers' Council of New Zealand. The council was created 18 months ago and is still in a "trial" period. It grew out of the amalgamation of the New Zealand Grape Growers' Council and the Wine Institute of New Zealand. McLennan is one of five grower-members on the winegrowers' council; the remaining seven members are winemakers.

McLennan believes there are strong parallels between the grape industry and other primary industries.

"At times we have been accused of being insular; we need to sit down and look at how other industries like dairying and kiwifruit have handled large production."

The dairy industry formed close relationships between producers and processors with its co-operative structure, which has stood it in good stead through cyclical highs and lows.

McLennan has experience with other industries. After a stint at university, he followed his ambition to be a sheep farmer, purchasing a property in southern Hawkes Bay in 1984. He carried a nagging thought for the next 10 years that he would be able to make better gains in horticulture.

His father had bought parcels of land in the Meeanee area just out of Napier after World War II and up to 1962, building up a holding of 120ha. After his father retired, the family leased the land out. McLennan, along with his four brothers and sisters, felt they could make a better return from the land, and in 1994 he and his wife Bronwyn returned to Meeanee. The grape industry was just beginning to get back on its feet. Bulk wine varieties had largely been removed with the help of the Government-funded grapevine pull scheme of the 1980s, and the industry was beginning to focus on top-end varietal wines. McLennan's brother sought advice from the Villa Maria viticulturalist of the time, Steve Smith. (Smith is now rated as one of the top 50 most talented people in the grape industry.)

Smith recommended planting sauvignon blanc at Meeanee.

"We only planted the one variety, 40 acres (16ha) of it; people thought we were mad, and even I was a bit apprehensive."

It is a matter of matching up the site and the variety. "There are very few regions where more than two varieties are suited; Hawkes Bay is the exception, with a wider range of terroir; we can grow up to three or four varieties - merlot, chardonnay, cabernet sauvignon, sauvignon blanc."

(Terroir is the French term that describes the unique set of climatic and soil conditions which make certain areas most suited for growing a particular type of grape.)

The McLennan family set up a company to run the business, Stirling Vines Ltd, with Mal at the helm. He is lucky to have the support of his family, who all have professions of their own (including a brother who is a food and wine writer in London). His siblings let McLennan get on with the business of running the vineyards, but offer critical support at times when it is most needed, such as last year when he lost a lot of his crop in the frost.

"It has helped the family stay together; they don't question what I do, and they don't rely on dividend payments from the vineyards," he says.

Stirling Vines has formed a successful partnership with Villa Maria, which has been critical to their success. Also at the suggestion of Villa Maria, four hectares of another cool climate aromatic variety, riesling, will be planted at Meeanee this season.

Three years ago, Stirling Vines purchased land in the Ngatarawa Triangle, known as a "terroir" suitable for growing red wine varieties. They have planted merlot and malbec, and will be adding syrah to the mix. "We have spread our risk by adding the hot-climate red block to the cool-climate whites at Meeanee," McLennan says.

The family talks about making its own wine, but are fully aware of the pitfalls for small wineries. An owner-operator struggles to do justice to growing the grapes, making the wine, and marketing the final result.

To produce a bottle of wine, one-third of the cost can be attributed to the grapes, one-third to the winemaking and one-third to marketing. "Marketing is the bit that gets missed out," he says.

Marketing is a topic that McLennan is clearly passionate about. New Zealand is well positioned in the top end of the market, but nonetheless grapes have been planted without a relationship with wineries.

Chilean and South African producers are fast catching up with New Zealand, and are able to produce cheaper wines. Most of the marketing effort to date has been concentrated on the European market, but McLennan sees a need to develop new markets in Asia.

New Zealand wines have been well branded and marketed, and are known for their superb quality. There are still exciting new varieties for New Zealand grape-growers and winemakers to develop, such as syrah.

"We need to focus on new markets, joint ventures or co-operatives," he says. Producers should not be afraid of specialisation. Look at the success of Daniel le Brun with methode champenoise, or Cloudy Bay with sauvignon blanc." Wineries catering for the local market may still need to offer a wider variety of wines at their cellar door, but exporters have the opportunity to be more specialised.

"Our future lies in specialising on specific sites to maximise gains."