Hi All,
What a crazy 15 months it has been for us all since I last put pen to paper. During lockdown last April, based on requests from several large clients to put their grafted vine orders onto our surplus list - and to put their grafting contracts for 2020 on hold - we were busy running “near-zero grafting” budgets for 2020, as well as making plans to pull out ~30% of our rootstock cutting production area - in hindsight, all crazy stuff indeed, given there is now a three year waitlist for vines!
So why were we planning to pull out all that rootstock? Pre GFC there were 25 grapevine nurseries in NZ putting out over 10 mill vines/year, but by 2009 that number had collapsed to just five - and all five of us who chose to "hang tough" weathered a 90% fall in demand. Yep, it was nothing short of brutal.
When demand returned with a vengeance in 2012, the vineyard industry was faced with a severe shortage of rootstock production - the 20 nurseries who had closed down had also removed their rootstock blocks, as had most contract rootstock growers. Given, like any vineyard, it takes 3-4 years for any new rootstock plantings to reach full production, demand for grafted vines exceeded industry capacity between 2012-15. This of course drove the surviving nurseries, and a couple of new entrants, to plant new rootstock blocks.
Somewhat predictably, by 2018 there was a significant over-supply of rootstock material and nursery industry capacity - combine that with an unexpected cooling in vine demand and we at Riversun ended up stripping and mulching almost 50% of our rootstock cutting material that winter - ouch!
Come 2019 and we harvested and grafted ~90% of our rootstock cutting material, and the order books were looking very solid for grafting 2020 - until Covid-19 showed up, and with it the very real prospect of near-zero grafting for 2020.
Given these mounting pressures in our industry, while sad, it is also understandable that two very long standing and reputable nurseries ceased operating last year - and their rootstock blocks were also removed. When you stand in one of our rootstock blocks looking at the 3.5 metre-high walls of dormant cutting material (see photo below), the thought of having to hand strip and then mulch it all is pretty damn soul destroying.
Photo 1: Waihuka rootstock block
Hopefully all the above helps explain our decision last April to remove ~30% of our rootstock area. Thankfully though, we held our nerve until the last possible hour - we had a sixth sense that we just might need some of it after all. While international supermarket demand for our wines surged during the first global lockdown, most thought it would not last. However, come August and export demand was still increasing very strongly- "unbelievable" was a word we kept hearing. By early September we were scrambling to bring in the 50% of rootstock material that we had held off stripping and mulching. Thankfully, we had taken a punt and brought in good volumes of Sav Blanc scionwood back in July - whew!
Our grafting book for 2020 soon filled up and by Xmas it was clear that grafting in 2021 was likely to be a busy one. Then along came vintage 2021 with the 20% drop in national yield - at a time when exports had surged 10% over the previous year- suddenly demand for vines far exceeded nursery industry capacity for the next 2-3 years - go figure!
So, here we are today with many clients asking all of us in the nursery industry "what's going on - what do you mean you are fully booked until planting 2024? You people in the vine nursery industry really need to sort yourselves out"- or words to that effect - mmm.....
By my best estimates, close to 30% of the rootstock plantings in NZ have been removed over the last 3 years. Only time can solve the current mismatch between supply and demand. But rest assured that the remaining nursery operators already have plans in place to ensure their rootstock production is able to meet anticipated industry demand over the coming decade (for both vineyard replanting and new developments). Based on all the above, I am confident that the current shortfall in vine supply will disappear within the next 3-4 years, as all these new source blocks come on stream.
On a personal level, for several months there I felt like I was suffering a severe case of "whiplash"- March to September 2020 was all about trying to navigate the good ship Riversun (with all 60-permanent staff on board) through the most challenging seas I have ever experienced in almost 40 years at the wheel. Our team worked incredibly hard to fire up some alternative income streams to help keep busy in the short term, and to further diversify our business in the medium term - think watermelon cropping, developing an organic green kiwifruit orchard, as well as using the apparent "down cycle" to establish our new 5 Ha scionwood source block - all of this happening up at our Whatatutu site.
Photo 2: Autumn sown mustard green crop at Whatatutu - 10ha of new land about to be developed into field nursery
These seemed like great ideas in the depths of last winter and as a team we committed to (and eventually delivered on) all of them, only to find ourselves stretched to the max when the last-minute vine orders finally started to land last September. To help us cope with all these exciting projects, as well as the big surge in vine demand, since last September we have added 15 new full-time staff. One of the first to join our team was Will Kerner, formerly Research Manager at the Bragato Research Institute and now our Technical Solutions Manager in Linnaeus - more on this and other key appointments later, suffice to say we have been very fortunate to have so many amazingly talented people join us in the last 9 months.
Thankfully, over the last few months most of us have had a chance to get a decent break in before the start of the new production cycle. Anna and I hit the road for the month of May, and I disconnected from all emails, phone calls, the internet, even newspapers - bliss and highly recommended!
Where are we at now?
- I recently spent a week on the road with Nick, Amy, Will and Rory attending all three NZW Grape Day events, which Riversun sponsored - great to see full houses everywhere and to catch up with so many of you
- rootstock and scionwood harvest and grading is in full swing
- vine lifting and processing started the last week of June and, on the back of a great summer/autumn, the vines are looking great
Photo 3: Whatatutu field nursery – vines shutting down and getting ready to be lifted
What is coming up?
- we will be on the road next week as sponsors of the Organic Winegrowers Roadshow - hopefully we will see you there, it looks like a great line-up!
- we have just yesterday finalised our vine prices for grafting years 2022 & 2023 and Amy will now start to contact all those on our wait-lists (more on this later). Suffice to say, with our "people costs" (hourly rates, lunches, transport, attendance bonuses) set to continue to surge in our region over the next 1-2 years (on the back of big increases in apple and kiwi plantings) we have had no choice but to reflect those anticipated cost increases (as well as likely inflation) in those prices.
Photo 4: Rory hosting our shed processing crew on their induction bus tour of operations
I will sign off here - apologies for the long silence and the corresponding big catchup - it really has been the craziest of times and I will endeavour to keep them much shorter by reverting to (mostly) weekly postcards,
Cheers for now,
Geoff
