NZ’s Pyramid Valley expands to Central Otago after $8m sale

Pyramid Valley in New Zealand’s Waikari Valley is expanding its portfolio to include a Central Otago Pinot Noir, following its sale to a fine wine start-up co-founded by Steve Smith MW, who also founded Craggy Range, for NZ$8m (£4.2m).

Steve Smith MW co-founded Aotearoa New Zealand Fine Wine Estates in 2017 with US entrepreneur and environmentalist Brian Sheth

Pyramid Valley was one of two purchases made by Aotearoa New Zealand Fine Wine Estates (ANZFWE) last year, which Smith co-founded with Brian Sheth – an investor and wildlife conservationist from Austin, Texas, and the sole director of US-based Sangreal Wines LLC.

ANZFWE has also purchased Lowburn Ferry Wines in Central Otago for an, as yet, undisclosed sum pending approval from the New Zealand Government’s Overseas Investment Office.

Founded by Claudia Weersing and her husband Mike in 2000, Pyramid Valley is one of the frontrunners of New Zealand’s growing biodynamic movement with its 2.2 hectare biodynamic vineyard planted with four separate blocks of Pinot Noir and Chardonnay.

It is located in the Waikari Valley in North Canterbury, on the south island, which also comprises the Waipara Valley. The region accounts for just 1,419 hectares of vineyards and is home to dozens of boutique producers who together produce 3% of New Zealand’s annual production.

Lowburn Ferry meanwhile, based in Central Otago, was founded by Roger and Jean Gibson in 2000 with a focus on Pinot Noir.

Speaking to the drinks business at the annual New Zealand tasting in London, Smith explained the rationale behind the purchase, and his “long term vision” to foster a fine wine reputation for New Zealand based on Chardonnay, Pinot Noir, and also Sauvignon Blanc.

“We didn’t want to start from scratch again because it takes a long time to get some vine age and build a brand,” said Smith. “But we knew there was an opportunity if we could find 2-3 small New Zealand estates that have mature vines and that have been making wines from that property for the last 10 years – properties that were part of their environment with a good brand but are not fully developed so we could expand if we wanted to.

“It was going to be based on Pinot Noir and Chardonnay. I think New Zealand has a real opportunity in that fine wine space with these two grape varieties. That was the fundamental idea.”

Neither estate was on the market at the time, and in the case of Pyramid Valley it took 18 months for Smith and Sheth to agree a deal to acquire it.

“Outside of Burgundy [Pyramid] is one of the most exceptional properties I have seen in my life,” said Smith. “The more I see the wines, I think it’s one of the great Chardonnay properties of New Zealand. It’s absolutely unique. It’s very cool and has genuine clay-limestone soils. In all the vineyards I have been to, there’s something about them that feels right, and I had that with Pyramid. I have a rule that you never buy a property on a good day, you should buy it on the worst day, and even on the worst days Pyramid was awesome.”

“I genuinely believe that in 15-20 years it will be regarded globally as one of the great Chardonnay properties in the world,” Smith added. “Mike and Claudia have done all the hard work in finding it and planting the vines and with its biodynamic philosophy that’s hard. For them, it was about passing on what they have done to someone that was going to carry it on, so we had to convince them that we were the right people to do that.”

The Pyramid Valley estate in Waikari, North Canterbury

EXPANSION PLAN

Now under the ownership of ANZFWE, Smith revealed ambitious expansion plans for the biodynamic wine estate, confirming that it would be adding a Pyramid Valley Central Otago Pinot Noir to its portfolio, as well as a Pyramid Valley Sauvignon Blanc from a vineyard in Waipara as part of its Grower Collection.

Currently, Pyramid’s Waikari home estate wines include its Earth Smoke Pinot Noir, Angel Flower Pinot Noir, Lion’s Tooth Chardonnay and Field of Fire Chardonnay, which retail at up to NZ$120. The total estate covers around 80 hectares, with 15-20 of that suitable for high-quality viticulture, says Smith. Plantings at the home estate will be expanded in the coming years, however it will be 3-5 years before they start production.

In the meantime, a 2017 Pyramid Valley Pinot Noir has been produced, set for release in March 2019, from part of the Lowburn Ferry estate in Central Otago – which covers 22 hectares with 3ha of that vineyard.

“We will continue to make Lowburn Ferry Pinot Noir from its designated home block, but the balance of its vineyards will be used for Pyramid Valley Central Otago Pinot Noir,” explained Smith. “We will extend plantings of that vineyard, and that will be part of the Pyramid Valley story.”

“If you look at it from a business model point of view, Central Otago is the centre of New Zealand tourism,” he added. “It’s where people go, and not necessarily for the wine but for everything that’s there. Pyramid Valley having a presence in Central Otago gives it a chance to be part of the wider fine wine world than if it were only based in Canterbury. But importantly we wouldn’t have done that if we hadn’t found the right estate in Lowburn Ferry.”

The newly configured estate will be renamed Mata-au (Clutha River), which will comprise Lowburn Ferry’s home block, alongside the vines used to produce Pyramid Valley’s Central Otago Pinot Noir.

Smith also revealed plans to add a Sauvignon Blanc to Pyramid Valley’s Grower Collection of wines produced outside of its home estate, choosing “the oldest vineyard in Waipara” as its source. While the exact vineyard remains a secret, Smith did say it was on the southern bank of the Waipara river with glasnevin gravel soils.

“We are very focused on Pinot Noir and Chardonnay but we will be bringing Sauvignon Blanc under the Pyramid Valley banner,” he said. “Having our Sauvignon Blanc from North Canterbury, not Marlborough, we took a similar approach as Craggy, going to Martinborough instead of Marlborough.

“In North Canterbury, you go there now and see what’s happening there with the producers and younger people coming in with different ideas but on established vineyards. Greystone, Black Estate, Boneline. These are often established vineyards but they are relatively young people that have come in and influenced the direction. I really believe Waipara and North Canterbury, what’s happening there has got all the components to create a new fine wine region.

“Properties like Bell Hill and Pyramid are on the edge of being able to ripen Chardonnay and Pinot. They have some vintages when they can’t. But if you believe in climate change most other places are going to get too warm for Chardonnay and Pinot. You can do it in Chablis but that’s getting warmer were else are you going to go? There are not too many places. It’s a long term investment.”

Pyramid’s Sauvignon Blanc will be produced with the 2018 vintage and released in March 2019 with an estimated retail price of NZ$16-20.

FINE WINE FORTUNES

On New Zealand’s fine wine promise Smith is confident that it can carve a reputation for itself based on the three-pronged power of Pinot Noir, Chardonnay and Sauvignon Blanc, stressing that this NZ$8m purchase of Pyramid Valley, which is separate to its ongoing purchase of Lowburn, was a long term investment in New Zealand’s fine wine future.

“It’s a significant investment and people will look at it and think it’s a lot to spend but this is a long term plan and there’s no more great land being made,” said Smith. “We spent a long time looking at it. If it was a short term plan we would have been wrong but if it’s a long term fine wine plan, it’s a good investment.

“If the world is getting warmer it’s going to be harder for many of these existing regions producing wines in cool climates to remain cool. In New Zealand all the climate change models show that the level of change is going to be at the low end because we are an island nation – we don’t get the extremes in change. If you look at viticulture from a climate change point of view New Zealand is one of the best investments.”