Australian wineries luring diverse and thirsty buyer pool

Metropolitan lifestyle seekers continue to hunt down country vineyards as investors swoop over larger-scale and high-profile wineries, both salivating over the prospect of an ongoing domestic tourism boom.

And as the effects of the China trade wars start to impact the sector, there may be a dip in prices.

There are a fair few wineries of varying sizes and brands currently listed across Australia, with price tags typically ranging from sub $1 million for a small vineyard to tens of millions for larger operations.

Tulloch Wines occupies nearly eight hectares in Pokolbin in the heart of the NSW Hunter Valley. It is one of a number of wineries currently on the market. Picture: realcommercial.com.au/for-sale

James Simpson, regional director central west for Acumentis, said smaller winery assets are “firmly underpinned by the lifestyle-related market still booming throughout many regional locations”.

“These participants are not so much motivated by the production of the vineyard, or the potential net income from the cellar door, rather they are buying themselves a lifestyle and a job at the same time,” he said.

PropTrack Economist Anne Flaherty said the “push to the bush“, evident even before the pandemic, is still very much in motion.

“The pandemic brought forward retirement for many Australians and led many others to rethink their priorities. This led to a record number of people moving out of capital cities into regional areas and drove up the pool of buyers looking for vineyards,” Ms Flaherty said.

“Changing ways of working combined with the Great Resignation continue to lead many to reconsider the type of work they do and where they choose to live. These factors are arguably leading more to consider investing in assets like wineries.”

Rich tapestry of buyers

But for a niche asset class, wineries attract a broad pool of potential buyers.

Medium- to larger-scale properties with multiple income streams such as weddings and functions, accommodation, a restaurant or cellar door are piquing the interest of existing operators looking to scale up their businesses, as well as institutional investors, if it fits into their portfolio.

And the reopening of Australia’s international border is likely expanding that pool even further, which Ms Flaherty said may be “boosting the confidence of vendors to bring their properties to market”.

After a combined 40 years’ experience in wine production, the owners of Stone Bridge Wines and associated vineyards are ready to hang up their boots. Picture: realcommercial.com.au/for-sale

Tim Altschwager, national director of agribusiness at Colliers, said more institutional investors are showing interest in large-scale or high-profile wineries than ever before, often choosing to lease it back to a winery or wine company.

“They’re after a highly recognised brand or something in a quality wine region,” he said.

Iconic wine brand hits the market

Tulloch Wines in the NSW Hunter Valley was listed in May, with expressions of interest closing on 16 June.

The buyer will inherit a 127-year-old brand and buildings occupying over nearly eight hectares of stunning landscape, including two hectares of vineyards, in the heart of Australia’s oldest wine region.

Agent Chris Malone at Ray White Rural, who is selling the property in conjunction with HTL Property, said the winery has garnered “a considerable amount of interest” from a wide range of buyers, from private individuals to hospitality operators and institutional investors.

“People are seeing an opportunity from a tourism perspective to value add and improve what’s already done,” Mr Malone said.

“There’s an enormous opportunity there to find new markets in the hospitality space and accommodation space.”

Challenges for wineries reliant on exporting

But owning a winery is only wonderful if it’s profitable.

Many premium assets and well-established brands supplying the thirsty domestic market continue to thrive.

As do wineries with tourism assets such as restaurants, cellar doors and accommodation located within weekend hopping distance of capital cities.

This revenue stream appears solid for the medium-term, with domestic tourism forecast to return to around its pre-pandemic level in 2022-23, then surpass that previous peak in 2023-24 and enjoy moderate growth in 2025-2026, according to Tourism Research Australia.

But wineries reliant on exports continue to be challenged by global supply disruptions and trade wars with China that are resulting in hefty wine tariffs.

Wineries attract absolute novices as well as hospitality operators and passive investors. Picture: realcommercial.com.au/for-sale

A sizeable 59% of wine produced in Australia was exported during the 2020-2021 financial year and China, a high-margin market, is not easily replaced. The domestic market has very limited capacity to absorb additional volumes and has recently been experiencing unprecedented competition from imported wine, according to Wine Australia.

Mr Altschwager said the trade wars affect the sale of the wine but they’ll also affect winery property prices as well.

“There’ll be too much fruit on the market and ultimately the price will come back down, and then we would expect the overall values of vineyards to have a bit of downward pressure going forward.”

Novices can do well with wineries

Larger operations are likely feeling the force of these headwinds more than boutique vineyards.

And these smaller operations are often open to those with no wine experience at all. But as with any business decision “it’s important to do you homework” Mr Simpson said.

“Some industry knowledge is advantageous, however not essential. I have seen many examples of first-time industry participants entering the market and doing well. Location of the asset is key here.

“The flipside of course, is that some participants enter the industry because it sounds nice to own a vineyard, pay far too much for the asset and or business, and fail within two years because the business is not operating at optimal levels,” he said.

Wineries currently on the market

Looking to buy?  Here’s a look at the small- to medium-sized wineries currently on the market.

Tulloch Wines

638 De Beyers Road, Pokolbin, NSW

The sale comes with Tulloch’s loyal 14,000 customer database and its long-established relationships with distributors.
Picture: realcommercial.com.au/for-sale

A diverse group of buyers are already drooling over Tulloch Wines in the prestigious heart of NSW Hunter Valley, just two hours north of Sydney.

The package includes an established brand, a cellar door, a restaurant and a profitable vineyard, as well as Tulloch’s customer database.

Stone Bridge Wines & associated vineyards

62 Spring Gully Road, Clare SA

Wineries such as Stone Bridge Wines in South Australia’s Clare Valley may appeal to those seeking a taste of vintner culture. Picture: realcommercial.com.au/for-sale

This package includes a homestead, winery and three vineyards: Stone Bridge Wines, Square Mile Vineyards and Barinia Estate Vineyard, with the opportunity to purchase as a whole or as five separate lots.

Huon Valley vineyard

1848 Cygnet Coast Road, Cradoc, Tasmania

This property in the picturesque Huon Valley in southern Tasmania is for sale via expressions of interest.
Picture: realcommercial.com.au/for-sale

This cool climate operation, formerly known as Panorama Vineyard, occupies more than 23 hectares along the banks of Huon River.

The buyer will inherit a large modern winery with offices, cellar door, a modern bottling plant, a laboratory and a 300-barrel, climate-controlled barrel hall, plus a wealth of tourism opportunities.

Traralgon winery

140 Burnets Road, Traralgon East, VIC

This property also offers a lake, grazing paddocks and a cattle yard. Picture: realcommercial.com.au/for-sale

Around two hours east of Melbourne and only minutes from Traralgon town centre, this homestead, vineyard and 180-seat function centre is a complete food, wine and lifestyle offering set across eight hectares.

Mountain Ridge Wines

11 Coolangatta Road, Coolangatta, NSW

Mountain Ridge wines is located in the heart of the Shoalhaven, a rapidly growing region around two hours south of Sydney.
Picture: realcommercial.com.au/for-sale

The current owners snapped up this property in 2017 and created an ecologically sustainable operation that includes a restaurant for 100 people plus a house, farm, winery, vineyard and market garden.