The Martinborough region is renowned for its Pinot Noir wines. Here, small to medium wine companies are the major players, turning challenging growing conditions into an advantage. While crops are light, wines have an intensity of flavour, which has grabbed international attention and attracted premium prices.

Size-wise, it’s pretty insignificant growing about 800 hectares of grapes or just over 3.2% of the New Zealand crop. However, it punches above its weight, enjoying a reputation for producing this country’s best Pinot Noir.

Ata Rangi is a small wine company, producing around 12,000 cases of wines from 30 hectares of vineyards. Over half its production is Pinot Noir, split between the premium Ata Rangi and Crimson labels, the former using fruit from older vines. Almost half is exported, mainly to Australia, the EU, USA and Japan.

Martinborough Vineyard sells wine into more than 15 markets with a strong focus on Australia and the UK, including Ireland. Finland is the company’s fourth biggest market.

Interview with Clive Paton, Partner/Director, ATA RANGI Vineyard:

How did Pinot Noir first come to be planted in the Wairarapa?
A scientific report by Derek Milne published in 1978, suggested that climate figures for the Martinborough District were similar to Burgundy in France. The 1100-1300 degree days recorded was perfect for Pinot. This compares with about 1600 degree days for Cabernet and 1400 for Syrah.
At the time, virtually all the Pinot Noir planted in New Zealand was combined with chardonnay to make sparkling wines.
In 1980, sharemilker Clive Paton sold his cows to buy his first block of land at Martinborough and planted Ata Rangi’s first Pinot Noir vines. Meanwhile, Derek Milne and Russell Schultz established Martinborough Vineyards, nearby.

Martinborough pinots are widely regarded as the best in New Zealand. To what extent is this quality the result of the local climate and soils?
Growing quality Pinot Noir is walking a climatic tight-rope. Wines’ flavour intensity depends on there being a wide diurnal range, with cool conditions at night and intense heat in the day. Too cold, and there can be un-seasonal frosts, which wipe out crop at bud-burst. Too hot, and flavour intensity suffers.
At around 4.5 tonnes/hectare on average, yields in the area are well behind the rest of the country due to cooling southerlies which blow through the area during flowering in November/December and also boney soils. However, decreased quantity of grapes is more than made up for in wine quality.
In three out of the last five seasons, crops have been especially light due to cold conditions at flowering and frosts just after bud-burst.
“Last year’s crop was 30% of ‘normal’ with whole vineyards not picked,” says Clive.
Fortunately, the very conditions that limit crop in Martinborough vineyards enhance quality and buyers of wine from the region are prepared to pay a premium prices.

What do the soils contribute to quality?
Most Martinborough soils are gravels covered with a thin layer of clay, unsuitable for grapes. Vineyards are limited to uplifted river-valley areas, with vines planted into gravels which are very low in ‘fines’; the soil particles which provide fertility in other grape growing areas. Low natural fertility means that in most years – unless it’s unusually wet – canopy growth stops around Christmas.
A plus of the free-draining soils is that conditions are extremely uniform throughout the region and between seasons, guaranteeing consistency of flavour. This contrast with heavier soils, which are cool when wet and have varying water-holding capacity which can cause crop inconsistency.

Are special rootstocks used?
In the early 1980s there wasn’t much in the way of rootstocks around. The first vines were planted on their own roots and are among the company’s best vines although with the root-feeding insect phylloxera now in the district, their survival’s at risk.
Over time, there’s been some fine-tuning with mid-vigour rootstocks generally the most successful. On heavier soils, de-vigorating clones are used.

The last few seasons have been difficult, climatically. Do you think this is a sign of climate change, and if so can Ata Rangi adapt?
Clive has seen three changes in climate since he developed the vineyard. In the first 11 years, he didn’t have to worry about frosts, which fell in winter, never spring. In 1991 there was the first big unseasonal frost, on November 28, due to the eruption of Pinatubo “and we’ve been on frost alert ever since”.
The vineyard’s now protected with wind machines, designed to mix warm air from above the vineyard with cool air on the ground to prevent frost. These have replaced helicopters but are only effective when there’s warm air around for mixing.
One way other regions cope with wide crop fluctuations is to buy in grapes. Until recently, this hasn’t been an option in Martinborough, with every grower needing every grape they grow.
This is beginning to change, but pinot still tends to be purely Martinborough, to protect the region’s reputation for outstanding quality attached to the Martinborough Pinot Noir brand.

What is Ata Rangi’s ownership structure?
Ata Rangi is owned and managed by Clive Paton, his wife Phyll Pattie and sister, Ali Paton. All three have hands-on roles in the business and are paid equal salaries. Clive keeps in touch with the vineyard and winery as well as conservation projects, Phyll is responsible for export marketing and Ali handles finance and administration.

What are the advantages of being a small rather than corporate wine company?
Ata Rangi’s ownership structure is similar to a family farm, where the owners are employed fulltime in a business where all their capital is invested.
What sets the Ata Rangi brand apart is an uncompromising focus on quality, especially for Pinot Noir. While yields may be light and production small, this is more than made up for in price with the company’s Pinot selling for £30 a bottle in London, $US45 in the States and $Aus70-$105 in Australia.
Clive, Phyll and Alison are adamant that while the business must support them, quality will always be prioritised above profit; a dedication that can be difficult to maintain in a bigger company where winemaking standards can be compromised by accounting pressures.
Marketing is all important to maintaining a quality edge. This has been so successful that “the world now comes to Ata Rangi rather than us having to go to the world.” Clive, Phyll and Ali have close, personal relationships with their distributors which builds strong mutual trust and respect.
“We work in partnership when setting prices and strategies for allocating volumes.”
They take a marketing trip to Europe and the States every two or three years but visit Australia – which they see as an extension of the New Zealand market – several times a year.

How do you build in the resilience to cope with factors outside your control like low yields and a high New Zealand dollar?
One reason Ata Rangi’s ownership structure works so well is that all the owners are working in the business. This means that drawings can be adjusted according to income. The salary bill is not unmanageable when cashflow is down and there are no shareholders clamoring for a return on their investment.
“We’ve left most of our money in the business all those years, because we love what we do. You couldn’t ask that of employees.”
The company has managed to ride out poor yields in 2003, 2005 and 2007 and remain profitable because the high sale price of its wines.
An advantage of growing wine grapes rather than perishable crops, is the time lag between grapes being harvested and wines being marketed. A poor fruit-set means less wine will be made the following vintage but this can be planned for by mechanisms including buying in grapes or raising prices.
“From our crop estimate, we can predict how much wine will end up in the tanks then project income for two to three years ahead. We aim to be quite strategic and careful with spending, putting project’s on the back burner when we can see reduced income ahead and investing back into the company when profits are good.”
A staggered roll-out of Ata Rangi wines also helps, with Celebre cellared for two and a half years before release, pinot for one and a half years and white varieties for six months.
“We have three vintages rolling out any one time.”
Fortunately, every poor vintage has been followed by a good harvest the following year.

What are your future plans?
Phyll and Clive are beginning to think about how they can eventually retire while retaining their business. With this in mind, they are about to expand the Ata Rangi winery to increase processing capacity from 150 to 250 tonnes, with the extra crop sourced through contracts and leasing land. All Pinot Noir grapes will continue to be sourced in Martinborough, but other varieties could be bought in from Hawke’s Bay to be added to homegrown crop in Celebre and Rosé styles.

Interview with Helen masters – winemaker, ATA RANGI Vineyard:

What’s the winemaking input, to making a top quality Pinot Noir?
Winemaker, Helen Masters, has been in the Martinborough region for seven years, four years with Ata Rangi. In that time she’s learned to expect the unexpected, as far as seasons go. One year will bring a classic Martinborough vintage while others have been frosty or wet, all with an impact on fruit requiring different winemaking techniques.
“With Pinot Noir, it’s a matter of expressing tannins and balancing them to the fruit weight that’s there. At Ata Rangi, we are looking for the long, fine tannins found especially in our older vines.”
Tannin levels are relatively high when crops are light, and vice versa.
A pre-fermentation cold soak extracts fruit aromas, picking up clean, expressive notes.
Ata Rangi uses slow natural ferments, based on ‘wild’ yeasts that are naturally present rather than inoculation with commercial products. Different yeast strains operate at different temperatures so can be selected by altering temperature, Helen explains.
Every day she looks closely at the ferment including the cap of skins that floats to the top, to check that desirable yeasts are at work.
“If there’s an ethyl acetate smell, for example, I’ll warm the tank as a way of getting rid of undesirable yeasts and encouraging saccramyces which an ideal yeast for primary fermentation, converting sugar to alcohol plus carbon dioxide.”
As fruit is harvested, decisions need to be made on what should go where. Fruit of the similar ripening stage and quality tend to share tanks, with blending decisions made further down the track to create quality wines. Batches are left on their skins for varying times for post ferment maceration, before being pressed. This tends to be shorter for younger fruit where flavours are quite primary without the breadth of older fruit.
Decisions on when to start picking are based not only on fruit flavour and sugar levels, but also on whether grape pips have ‘lignified’ turning brown and stem appearance.
“Sometimes we need to hang fruit on the vine for longer to get seed to ripen more.”

Interview with Janine Tulloch, CEO, Martinborough Vineyard:

How important is Pinot Noir for Martinborough Vineyard?
Seventy percent of Martinborough Vineyard is planted in Pinot Noir. When the company’s 2007 Pinot was released in early March, 50% of production had already sold.

What is Martinborough Vineyard’s ownership structure?
Martinborough Vineyard is an unlisted public company with 600 shareholders. Seventy percent of shares are held by five family groups including the Milners and Schultzes who started the business in 1980. In 2004, it merged with Martinborough wine company, Burnt Spur, taking on its shareholders.
Key company staff – the general manager, viticulturist, winemaker and accountant – all own shares, which increases their commitment to the business’s success while adding to their rewards.

What has the merger with Burnt Spur achieved?
In the wine industry, companies with an under $1 million turnover can usually sit comfortably. However, a $1-$5 million is a difficult scale, requiring the infrastructure of a bigger company but with insufficient income to sustain the business, says Martinborough Vineyard CEO, Janine Tulloch.
By merging with Burnt Spur, Martinborough Vineyard has been able to increase its vineyard area from 24 hectares to 64 hectares; still a relatively small area, which enables the company to maintain its focus on quality while enjoying some economy of scale. The winery will soon be expanded.
“We’re still small enough, with only 15 staff, for everyone to be hands-on and know one another – and also our customers – well,” says Janine.
A lot of time is being invested in markets, building relationships with distributors, sommeliers and other trade as well as consumers.

What are the advantages of being a public company?
Martinborough Vineyard’s board of eight contributes considerable commercial savvy. Shareholders tend to be motivated by their love of wine rather than expectations of immediate profits and accept the company’s long-term strategy.
They are a significant market for Martinborough Vineyard wine – made available at a special price - and are great ambassadors for the brand.

How has the company structure helped Martinborough Vineyard ride industry volatility such as small crops and a high New Zealand dollar?
Last year Martinborough Vineyard sought another $1.5 million of investment, primarily for the purchase of additional fruit to supplement the small volumes harvested. Shareholders took hold of this opportunity to increase their stake holding in the company, plus there was some new investment resulting in the float being over-subscribed to $1.8 million.
“If the need arose, we’d do it again,” says Janine.
The strength of the New Zealand dollar has certainly had an impact, says Janine, but since the company sells to 15 markets in local currencies there was not a major effect on overall profitability.
Australia is a major market for Martinborough Vineyards; “a great market because it’s close so easy to access and support” plus has a favourable exchange rate with the New Zealand dollar.
“And they love and understand New Zealand wine.”

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