Assessing the New Zealand organic winegrowing model : A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Applied Science at Lincoln University

Abstract

Global organic wine production is increasing in value and volume (Grand View Research, 2024). New Zealand’s organic wine sector is also growing (BioGro NZ, 2021; Organics Aotearoa New Zealand, 2022), but little research has been done to determine the economic viability of organic management principles in the New Zealand viticulture context. The purpose of this research was to collect and analyse vineyard production and financial data from selected organic winegrowers in Marlborough and Central Otago to determine vineyard profitability. In order to participate, winegrowers needed to be certified organic by an external accrediting body, such as BioGro or AsureQuality, having fully completed the organic conversion period, and have detailed and accessible accounting records. Marlborough producers needed to be growing Sauvignon blanc on their vineyards; Central Otago participants needed to be producing Pinot noir. Production and financial data were collected via a survey based on the Ministry for Primary Industries’ (MPI) Vineyard Benchmarking Reports. The survey collected detailed data from three-year period, 2020-2022, in an attempt to moderate any effects of atypical vintages on the results. The collected data was analysed to determine vineyard revenues, production costs, and profitability of individual growers. The results were compared to identify outliers and trends before being aggregated to provide regional averages. Five Marlborough Sauvignon blanc producers participated in the research. They were profitable in 93% of harvests surveyed, with an average profit of $6,562/ha from 2020 to 2022. They achieved an average yield of 9.48t/ha and fruit price of $2,291/t. Their major expenses were manual pruning, canopy & crop management, and other wages (mowing, mulching, seeding, and unallocated labour costs). Two Central Otago Pinot noir producers participated in the research. They were profitable in 67% of harvests surveyed, with an average profit of $5,869/ha from 2020 to 2022. They achieved an average yield of 5.38t/ha and fruit price of $6,466/t. Their major expenses were vineyard management (viticulturist/manager wages), canopy & crop management, and other wages (mowing, mulching, seeding, and un-allocated labour costs). The two Central Otago producers provided some very disparate results, with large differences in fruit prices and expenses, but with similar yields, causing a wide range in revenue and profitability. Expenses increased from 2020 to 2022. Over the three year period there was a 21% expense increase for Marlborough and a 24% expense increase for Central Otago. The largest increases were seen in various labour costs, which were subject to a rising minimum wage, inflation, and a more competitive labour market (Ministry for Primary Industries, 2023). In both regions, achieving yields close to target volumes was instrumental in returning a profit. The Marlborough producers achieved target crop levels in only 20% of harvests, whereas the Central Otago producers obtained their desired yields in 50% of the surveyed vintages. For Marlborough Sauvingnon blanc producers the average gap between target and actual yield from 2020 to 2022 was -17% (1.76t/ha below target); for Central Otago Pinot noir producers the average gap between target and actual yield from 2020 to 2022 was -1% (0.07t/ha below target). The research found that organic winegrowers in both Marlborough and Central Otago were profitable in most years, with reduced yields due to adverse weather conditions being the main cause of unprofitable vintages. This project could serve as the starting point for longer-term reporting on the financial performance of organic vineyards. The scope could be expanded to include winemaking and sales data, or these results could be interpreted in conjunction with projects assessing those facets of organic wine production in New Zealand to provide a greater understanding of organic wine businesses in their entirety