English wine is proving to be one of the fastest growing industries in the UK agricultural sector, opening up new business opportunities for some landowners.
Ed Mansel Lewis, head of Strutt and Parker’s vineyard advisory group, said the acreage of land planted to vines in the UK had grown 160 per cent in the past 10 years and further significant growth was forecast.
Mr Mansel Lewis said the rapid growth of the wine industry may open up new opportunities for landowners, with sites that are suitable for wine production attracting premium prices.
Site selection is crucial when it comes to establishing a vineyard, or the result is inconsistent yields, he said.
The supply of land coming to market each year is limited and, of that, only a tiny proportion will be suitable for vineyard planting, so most land ends up being purchased off market.
Vines can be grown in many locations, but the best are in sunnier, drier parts of the UK, such as the south east of England, where the soil type is very similar to that found in northern France.
Mr Mansel Lewis added: “The best sites are on free-draining, south-facing slopes that are not exposed to strong winds or late frost, are not too high, and where average temperatures and sunshine hours are highest.
“For sparkling wines, loam over chalk is usually favoured, but vines can thrive on many soil types, as long as soil is free-draining and matched to the appropriate root stock.”
Selling land is not the only option.
He said: “Many landowners have sites which would be perfect for a vineyard, but are not willing to sell the land for a variety of reasons.
“Vineyard operators are willing to look at alternative arrangements, such as long leases, grape contracts or joint ventures.
“A landowner entering into a lease agreement for a vineyard would typically need to be willing to grant a lease of 30-35 years, so it is a long-term commitment. However, rental values can be up to double what might be offered for the land, given in some cases it will be marginal arable ground.
“This can be the right approach for people who are not willing to sell, but are reluctant to take the level of investment required to enter wine production themselves.”
Setting up from scratch is not something everyone will be able to finance, he said. Vineyards have high up-front investment costs and it is seven or eight years before wine sales generate any significant income.
“It is a sector requiring deep pockets and a good business plan before diving in,” added Mr Mansel Lewis.
“HMRC has recently clarified that when it looks at eligibility for Agricultural Property Relief, its definition of agriculture includes growing vines for wine production, which should give landowners confidence.”