Book extract: How a crazy government scheme created a billion-dollar industry

The unintentional consequence of a government-backed scheme to subsidise winegrowers to pull their vines to eliminate a wine glut was to boost Marlborough's then fledgling plantings of Sauvignon Blanc. Today, May 5, is Sauvignon Blanc Day and to celebrate we publish an extract from Marlborough Man, in which winemaker Allan Scott describes how the poorly conceived and executed scheme to reduce the industry had the opposite effect. The result has been a billion-dollar export industry.

First, to argue that there was a glut is ridiculous. While it is true that many New Zealand wineries were struggling and that cask-wine consumption was quickly becoming less fashionable, many wineries were doing just fine.

Corbans continued to experience a number of difficulties, while Seagram had decided that it had had enough and had divested itself of Montana. But there were plenty of bright spots. Ernie Hunter, for example, took home three trophies – including the best wine of the show – at the London Wine Fair in 1985 for his Fumé Blanc, so it wasn’t as if the world was unaware of the progress we were making as an industry. David Hohnen showed up and got Cloudy Bay going, so clearly he saw some promise, too.

Daniel Le Brun, meanwhile, was already showing that he could make sparkling wine in Marlborough as good as any from his home region of Champagne.

Most growers and winemakers had already figured out by 1985 that Sauvignon Blanc was going to be the star of the Marlborough show — not Cabernet, Chenin Blanc or Müller-Thurgau. By this time, almost everyone in Marlborough had at least a decade’s worth of experience in growing and vinifying multiple different varieties. We knew what worked well and what didn’t, what sold and what didn’t. Riesling showed lots of promise, but Sauvignon Blanc not only performed exceptionally well in Marlborough, it could also be cropped at a very high yield and still deliver excellent quality.

Any experienced or sensible grower knew this well before 1985, but some simply wanted to keep their heads tucked in the sand rather than commit to the time and expense of replanting. Others just weren’t particularly good at making wine, selling it, or both. But none of this meant that there was an industry-wide glut.

However, a few high-profile and politically connected wineries were experiencing trouble – notably Villa Maria, which had gone into receivership.

Much like when General Motors faced collapse in America in 2008, Villa Maria couldn’t go down here in New Zealand in 1985 without a dedicated effort being made to save it, as it wasn’t the sort of company that could disappear overnight without anyone noticing.

One of the industry’s biggest players being on the brink of going belly-up is enough to sell a nervous, agriculture-driven government on the notion that there is a problem requiring intervention, glut or no glut. (This was more than a bit ironic, given that the new Labour government at the time professed itself to be laissez-faire, and generally pursued a departure from agricultural subsidies and farm-friendly policies.)

So it came as no surprise that the scheme was implemented hastily and with little consultation with industry and economic experts before it was announced. The vine-pull scheme, it had been determined, was the best and fastest way to save the industry as well as reduce New Zealand’s vineyard and by 25%.

As we all know, it accomplished nothing of the sort. (The exceptions were Hawke’s Bay and Gisborne, where there was some initial reduction of vineyard land, but much of that land was already buggered with phylloxera anyway.) The main reason why Marlborough remained the same size in planted vineyard hectares is that the scheme contained no requirements in terms of what was to be done with the land once the vines were pulled.

This meant, of course, that any enterprising, smart grower or winery could rip out Müller-Thurgau vines one day, collect a cheque from the government the next, and replant the entire property with Sauvignon Blanc the day after that, perhaps even at an immediate profit. Some people even bought planted, productive vineyards, then took the subsidy to rip out the vines and immediately came out ahead on the investment – often using some or all of the subsidy to replant right away. Everywhere you looked, Peter was being robbed to pay Paul.

In the decades since, many have stated that it was widely known that New Zealand was mostly producing mediocre-quality, uninteresting wines, and that the vine-pull was intended by the government to facilitate the shift away from Müller-Thurgau and towards Sauvignon Blanc. I seriously doubt that anyone in government actually believed that vineyards would simply be ripped out and replanted.

If that is what they thought would happen, everyone should have been paid to replant with Sauvignon Blanc in a purely straightforward manner. Essentially, that is what happened anyway – but anyone who tells you that the vine-pull was conceived or executed intelligently by the government, much less that the intentions of the scheme were sincere, is delusional at best.

© Marlborough Man, by Allan Scott with Eric Arnold. Published by HarperCollins New Zealand, 2017