The forced sale of wine giants Villa Maria and Sacred Hill after they were placed in receivership came as a shock to many in the industry. Photo / Warren Buckland
The forced sale of wine giants Villa Maria and Sacred Hill after they were placed in receivership came as a shock to many in the industry. Photo / Warren Buckland
News that wine giants Sacred Hill and Villa Maria were for sale after being placed in receivership shocked many in the industry, with concerns there could be other casualties after what has been a "challenging year" for exporters.
But others in the industry say Covid-19 has brought about positive changes.
Export New Zealand Hawke's Bay chief executive Amanda Liddle said it had been a challenging year for wine exporters and those in the industry had been "hit particularly hard".
She said opportunities from people going out to restaurants overseas and having a wine sommelier recommending a Hawke's Bay wine had been lost through Covid-19 restrictions.
She thought it was unlikely businesses would be able to find the same returns in domestic markets, as exports were where the larger profit margins were but it was "an extremely hard market", she said.
"The money is in exports. The margins are overseas."
Covid-19 restrictions saw wine sale demand from restaurants drop away overnight, said Eskdale winemaker Philip Barber, of Petane Wines. Photo / Paul Taylor
Sacred Hill, which has vineyards in both Hawke's Bay and Marlborough, was placed into receivership in early July, owing nearly $100m to its banker.
The majority of these debts and liabilities - $98 million - are owed by Sacred Hill Marlborough Vineyards, with $69.1m in liabilities to creditors of which Westpac New Zealand is the largest creditor, owed $52m.
Specialist contract winemaker VinLink Marlborough looks set to purchase the Marlborough vineyards business, though Hawke's Bay Today understands details of the sale are still being worked through.
Sacred Hill's appointed receivers, Ross Logan and Andrew McKay of BDO Auckland, declined to comment.
Villa Maria was placed into receivership in May, owing its bankers more than $200 million.
Sileni Estates in Hawke's Bay is one of four principal wineries among the Booster Wine Group's several wine brands.
Its chief executive Louis Vavasour described Sileni as their biggest brand by volume producing about 300,000 nine-litre cases for export and about 60,000-70,000 nine-litre cases domestically.
Louis Vavasour, chief executive of Booster Wine Group which includes Sileni Wines, said what happened to Villa Maria and Sacred Hill was "very unfortunate" . Photo / Supplied
He said while Covid-19 had seen export demand from overseas restaurants drop off, consumption had actually gone up.
What was different from previous disruptions such as in the global financial crisis, where "the disposable income wasn't there", was that people were still seeking premium products like New Zealand wines.
"People were home and still had money to spend.
"The trends that we saw, especially in the US, were that instead of going to a restaurant where they had a glass, they were substituting.
"We saw that people weren't willing to compromise the quality of wine."
However, other premium producers like those in Central Otago were "certainly feeling the pinch", Vavasour said.
This was partly driven by increased labour costs on the back of a shorter vintage and bank policy changes.
"[For] a lot of wine companies their profits won't be as good as what they could have been."
Vavasour said the wine industry was very capital intensive and managing growth expectations was fundamental.
"We are growing in a way that makes sense to us.
"There's been a little bit of a storm and it's caught a few people out.
"What happened to Villa Maria and Sacred Hill was very unfortunate."
He was optimistic about the future, especially for Hawke's Bay where demand was really good and had been increasing.
Boutique winemaker Philip Barber, of Petane Wines in Eskdale, sells about a quarter of his wines through the Hawke's Bay Farmers' Market. Photo / Paul Taylor
Boutique winemaker Philip Barber, of Petane Wines in Eskdale, said they were too small to be interested in exports.
He admitted news about Villa Maria and Sacred Hill was a "bit of a shock".
"There's always been people going out of business. It's just the way it's always been.
"It is new to see the big guys disappearing."
Last year, they'd had almost no sales for close to two months during the initial Covid-19 lockdown as they mostly sold to restaurants.
"It was a tough time but we bounced back pretty quickly."
These days he sells around a quarter of his wines at the weekend Hawke's Bay Farmers Market, part of a trend for consumers to buy locally.
Coupled with increased interest in organic and speciality wines, he was still optimistic about the future of the industry.
Sally Duncan, chair of Hawke's Bay Winegrowers Association, said issues relating to shipping had definitely affected the wine industry.
She said the region was in "good shape" in terms of wine quality, off the back of three to four years of incredible vintages.
