Grape growers eye co-operative

Taking ownership: Grape growers Ross Flowerday and Kevin Kilpatrick want to set up a co-operative wine company owned and operated by growers to return some power to landowners.
Relevant offersA group of Marlborough grape growers are in the early stages of establishing a co-operative wine company owned and operated by growers.

The co-operative will be built on an existing Marlborough wine business, with the aim of returning profitability, business sustainability and vine management back to growers.

Spokesmen Ross Flowerday and Kevin Kilpatrick are part of a steering committee of five Marlborough growers appointed to develop the concept of a grower owned wine company.

They would not name the existing wine company yesterday because of commercial sensitivity, but said it was set up by a small group of Marlborough growers more than 10 years ago.

The company grows grapes, produces wine and exports to international markets including the United States.

Mr Flowerday has been growing grapes since 1995 and Mr Kilpatrick, who has a background in management and finance, has been growing for four years. They are both possible shareholders who have no previous ties with the existing company.

Mr Kilpatrick said they had received interest from more than 50 growers in the region and are confident they have the numbers they need to go ahead.

"We want to return ownership and a sense of stability and certainty to the growers," Mr Kilpatrick said.

"Instead of these wild fluctuations in prices brought about by short-term reactions to seasonal vagaries, we have a business model based on a long-term view of the industry."

Some growers had already signed a letter of intent confirming their commitment to become a shareholders in the co-operative, and others had expressed interest but could not commit themselves yet because of existing contracts.

The committee was getting advice on the option of setting up the company with progressive membership so it could take new growers when their existing outside contracts expired.

Mr Flowerday pointed to the short 2012 vintage when the yield was down by up to 50 per cent for some growers. "That loss goes straight to the grower's bottom line," he said.

"In our model, the growers are the shareholders so any profits or losses come back to us."

Economies of scale would provide savings in vineyard management and operation, wine production, shipping and marketing, he said.

"We will be managing it from the farm gate to the user, meaning growers are happy, the customer gets what they want and there is total efficiency in between."

Supplying other wineries with fruit would continue to be a part of the business.

But the group would take into account the location and condition of each grower's land to ensure the health and balance of the plants. Instead of growers trying to match the demands of wineries, they would be able to aim for production based on best viticultural practice for their land.

Mr Flowerday said a co-operative increased the likelihood of keeping the land and profits in the hands of people living in the region.