Foreign investors are making a play for McLaren Vale’s tightly held wine real estate
LOCAL families and winery operators have tightened their hold on McLaren Vale’s prime vineyard and winery real estate in recent years, but savvy foreign investors are zeroing in on the region as industry confidence soars. See who owns which parcels of land.
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LOCAL families and winery operators have tightened their hold on McLaren Vale’s prime vineyard and winery real estate in recent years, but savvy foreign investors are zeroing in on the region as industry confidence soars.
As wine exports continue to surge on the back of a booming Chinese market, and following a succession of poor vintages in Europe, foreign investors are turning their eyes to the state’s premier wine regions to secure their supply of grapes and cash in on renewed optimism in the sector.
The Advertiser and wine business advisory firm Langley & Co. have analysed close to 100 of the biggest Barossa Valley and McLaren Vale vineyard and winery transactions in the five years from July 2013.
The analysis reveals 70 per cent of major property sales in McLaren Vale were made to local South Australian families and wine operators, representing a $31 million investment in the region.
However, while local owners continue to control the lion’s share of McLaren Vale’s premium vineyard and winery real estate, interest from foreign investors has intensified.
Chinese investors have splashed out more than $10 million on seven properties in the past five years, with five of those acquisitions taking place in the past two years alone.
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Langley & Co. director Stephen Strachan, who sells wine businesses and real estate across Australia, says McLaren Vale is now firmly on the radar of Chinese investor groups.
“If you go back four of five years most of the Chinese interest was really around prestige brands and sites,” he said.
“These days the Chinese parties that come to us are somewhat more sophisticated than they were five years ago and so we’re having more conversations around other regions and McLaren Vale in particular.
“I think McLaren Vale has really lifted in terms of profile with Chinese buyers over the last couple of years but it does seem to be more tightly held (than Barossa Valley).
“If you look across Australia, McLaren Vale is a pretty clear second to the Barossa when it comes to Chinese buyer interest, and Barossa and McLaren Vale are head and shoulders above every other region in South Australia.”
Last year investors tied to China’s Yinmore Sugar — part of the Bright Food Group conglomerate which owns food brands including Mildura Fruit Co and Sunbeam Foods — paid $2.9 million for the historic 42 hectare Wickham Estate in McLaren Flat.
Million dollar properties in McLaren Vale, Blewitt Springs and Sellicks Hill have also been snapped up by Chinese interests.
However, foreign investment in McLaren Vale is a relatively new trend compared to the Barossa Valley, which has attracted investment from the US, New Zealand, Argentina, France and China.
The biggest investor in McLaren Vale in recent years has been the acquisitive Casella Family Brands group out of Griffith in NSW.
The country’s largest family-owned wine company has been securing vineyards, wineries and brands in a number of the state’s wine regions, including Barossa Valley’s Peter Lehmann Wines, Coonawarra’s Brand’s Laira and Currency Creek’s Shaw Family Vintners.
In 2016, it paid $12.4 million for the 161 hectare Hawthorn Ridge and Reedy Creek vineyards in McLaren Vale — a deal that marked the turning point for the region’s vineyard market, according to Knight Frank agri business associate director Russell Iles.
“A succession of poor vintages in Europe and the increased demand from China has driven the price of bulk wine higher and there’s a real push at the moment to secure supply of grapes,” he said.
“As it becomes harder to find opportunities to get into the Barossa, the natural place for investors to look next is McLaren Vale.
“If you think about the proximity to Adelaide with the Southern Expressway, the stunning beaches and the quality of grapes in the region, it represents a more-than-appealing alternative to the Barossa for foreign investors.”
While foreign and corporate investors turn their attention to McLaren Vale, the coastal region’s smaller scale operations have historically been tightly held by local operators.
Local families including the Maxwells, Hamiltons and Hardys have all added to their property holdings in recent years, while Barossa Valley wine identity Warren Randall also invested in McLaren Vale last year, with his Seppeltsfield Wines paying $2.85 million for the Ryecroft winery and 40 hectares of vineyards.
McLaren Vale Grape Wine & Tourism Association general manager Jennifer Lynch expects the region’s ownership profile to evolve in the coming years as local operators tap into the growing pool of international capital.
“The Barossa brand is recognised internationally, but if you combine the quality of produce and natural assets of McLaren Vale, including 30km of coastline, that’s something the Barossa can’t offer,” she said.
“There is also a limited diversity of ownership in the Barossa, with a higher proportion of vineyards owned by the big three companies — Pernod Ricard, Accolade and Treasury Wine Estates.
“In McLaren Vale we have a higher number of integrated vineyard and winery operations run by multi-generation families.”
Mr Strachan is encouraged by the level of international interest in the state’s wine regions, dismissing concerns about the rate of foreign investment in Australian agricultural land.
“The Chinese are quite typically prepared to pay higher prices and from a sovereignty perspective I don't see what the risks are,” he said.
“I think the connections that Chinese have through ownership of wineries and wine brands in Australia are really positive in terms of their ability to sell that wine into China — I see that as upside.
“If you look at the facts, Pernod Ricard is a French company and they own more assets in the Australian wine industry on their own than probably all Chinese investors put together, but we don’t seem concerned about the French.
“When you're a grown up nation that operates internationally, when you’re comfortable to sell your wine into international markets, then you have to be open to a degree of international ownership.”
Mr Iles agrees, and anticipates additional foreign investment in the coming years as “the reputation of the Barossa Valley and McLaren Vale continues to grow internationally”.
“If the Australian wine industry wants to operate in a global marketplace, then we need to accept and encourage foreign investment and I believe we are on the cusp of a tidal wave of overseas capital investment,” he said.
Originally published as Foreign investors are making a play for McLaren Vale’s tightly held wine real estate
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