July 2019 – Leases: a workable solution. What’s holding it back?

In the last seven years the area under vines has doubled to over 3,500 hectares and there is no sign this trend is slowing down. It’s hardly surprising there is a loud buzz; with 500 commercial vineyards and 170 wineries there is a surge of optimism rarely found in traditional farming sectors.

What is fuelling the growth? To start, 60% of adults choose wine over all alternatives. This partly explains why spending on alcoholic drinks rose by nearly 3% between 2013 and 2017. In short, and despite regular warnings about alcohol consumption, the buying public is drinking more!

A less tangible, but important reason, is fashion. Supported by evidence that rising temperatures are helping to create a grape friendly environment, there is an increasing number of people who want to be part of an evolving, exciting industry.

Paradoxically the financial case for investing in viticulture is at best tenuous and, at worst, perhaps foolish. There are exceptions, but a new vineyard just producing grapes is unlikely to break even before year seven and, if the land has to be acquired, this can potentially extend the payback period to 15 years. So, if financial uncertainty is not a barrier, why is the sector not growing faster?

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