Demand for Okanagan vineyard land is pushing up prices despite concerns that climate change is crimping production and winery profits.
Agricultural land in the region rose in price by around 14.3 per cent on average last year, according to Farm Credit Canada.
Some wine-sector insiders told BIV that increasing property values stem from outside investors buying land to park capital in an asset that they view as safe and likely to rise in value while it is used in winemaking.
Others said that the trend is likely due to acquisitions by entrepreneurs passionate for decades about the wine industry and seeking to expand their holdings with land that is ideal for growing grapes and making wine.
The reality is likely a mix of both.
One of the deep-pocketed entrants to the B.C. wine industry in the past decade is technology whiz Markus Frind, who founded the online dating site Plenty of Fish in 2003 and sold it for US$575 million in cash in 2015 as its sole owner.
Another is Richter Bai, who accumulated much of his substantial wealth from mining and flax-seed processing, and who has been spending an estimated $100 million to create a winery at Phantom Creek Estate Vineyards and build out the site’s vineyard acreage.
Über-successful B.C. wine entrepreneur Anthony von Mandl has long been expanding his extensive holdings in the Okanagan. Von Mandl often does not publicly announce his winery purchases, such as when he recently bought Sperling Vineyards.
Each of these entrepreneur investors are focused on creating high-quality wines, which fetch the premium prices necessary to make their winery investments viable.
Marcus Frind building B.C. wine portfolio
Frind entered the B.C. wine sector in 2017, when he spent $7.2 million to buy the 13-acre lakeside property that had previously been home to former premiers W.A.C. Bennett and son Bill Bennett.
This is the site for his Frind Estate Winery, which he touts as the only beachfront winery in North America, and one of few worldwide. That novelty, he told BIV, helps attract a wider swath of the population as winery visitors.
Frind said he simultaneously bought an approximately 310-acre patch of raw land, which had no water access, in Rutland for $3.7 million.
Next came buying around 100 acres of land across the street from the Vernon Airport, and 820 acres of land nearby on Bella Vista Road – property he describes as being on “that thumb that sticks out into the lake near the Vernon airport.”
Frind also reportedly spent $7.5 million to buy a 100,000-square-foot warehouse that the BC Tree Fruits Cooperative previously used. That site includes about 13 acres of land that has 450 feet of frontage onto Lake Osoyoos.
“We just have a lot of land all over the place,” he said. “I don’t want to tell everyone which exact parcels we own.”
Frind’s most-ambitious wine-sector project is to build out a 310-acre vineyard on his land in Rutland – an initiative he openly admits has prompted skepticism, if not ridicule, within the wine industry.
He said he poured more than $10 million to install 130 kilometres of water piping, as well as a water main two kilometres away that is for the entire area.
“We’re only taking 18 per cent or 20 per cent of the water, with the rest of the water going towards other developments and housing,” he said. “We expanded the capacity for everyone.”
His team had to sculp and bulldoze the land to make it suitable for vineyards, he said. This year, they have been rapidly building out what Frind said he believes will soon be B.C.’s largest vineyard.
“The going rate for vineyard land is $350,000 per acre at the moment, and my Rutland property – with 300 acres of vineyards – that’s worth well north of $100 million,” Frind said, suggesting that his moves have already paid off.
Industry insiders, however, doubt that Frind’s Rutland property land is worth anywhere near that much.
“Quality vineyard land sells anywhere from $300,000 to $400,000 per acre, but that’s based on pedigree, where there’s a proven track record of the varieties planted actually making decent wines,” said InVino Consultants principal Ingo Grady. “That’s at least a 10-year undertaking.”
Farris LLP senior counsel Al Hudec, who helps winery buyers and sellers execute transactions, agreed.
He added that the $350,000-per-acre price tag Frind referenced is more likely to be achieved in the southern Okanagan Valley, where red grapes such as cabernet sauvignon thrive. Those grapes can often produce pricier wines.
Land in northern parts of the Okanagan Valley, where white-wine grapes predominate, sells for less, he said.
“Land up in the Kelowna area is worth more like $180,000 per acre because it’s quite a bit far north and that makes a real difference,” Hudec said.
Other entrepreneurs invest in Okanagan land
Von Mandl and Bai have been more strategic in their acquisitions than has Frind, said Grady, who has more than 40 years of experience in the wine sector and has worked for both von Mandl and Bai at different times in his career.
Frind, Grady said, is willing to take a chance on unproven land in areas not known to produce quality wine.
He said Bai’s pre-pandemic purchases included approximately 200 acres in B.C.’s esteemed Black Sage Bench, which is the area known for wineries such as Black Hills Estate Winery, which produces the well-known high-end B.C. wine Nota Bene.
Bai has also bought land elsewhere in the Okanagan and has exacting standards for his sites, Grady said.
“Bai went to Cawston to find a quality site that was southwest facing, and it took really hard work to prep that site,” he said. “It was back-breaking work establishing the vineyard, but you do that work when you know the site is promising.”
Bai, Grady said, also spent lavishly to get the right advisers.
“Bai has had very, very talented advisers from the get-go – people with masters of wine [designations] and some of the most respected winemakers from Napa [in California] and from France. That was his insurance policy to ensure that his investment would bear dividends.”
Meanwhile, Von Mandl’s Sperling Vineyards purchase is merely the latest in a series of acquisitions.
In 2020, he spent $12.5 million to buy Liquidity Wines Ltd., according to multiple past principals in that winery. Liquidity is likely best known for its 2016 Reserve Chardonnay, which won France’s Chardonnay du Monde gold medal in 2018 – an award that prompted the winery’s owners to tout the wine as the best chardonnay in the world.
Mandl in 2017 spent an undisclosed amount to buy Road 13 Winery – a purchase that included 50 acres of vineyards in the Golden Mile sub-appellation and a major processing facility in the southern Okanagan. This followed him spending an undisclosed amount in 2014 to buy Cedar Creek Estate Winery. No sale price was disclosed in 2013, when von Mandl bought the former Domain Combret property, which is near Road 13, and rebranded it CheckMate Artisinal Winery. Also, much like with his recent Sperling Vineyards purchase, von Mandl issued no news release to confirm his Domain Combret purchase at the time.
Von Mandl’s stable of wine brands also includes his prized Mission Hill Family Estate Winery and Martin’s Lane Winery. His Mark Anthony Group of Companies, headquartered in Vancouver, includes other brands such as White Claw and Mike’s Hard Lemonade.
“From what I hear, [von Mandl] is buying a whole bunch of land in Kamloops, and elsewhere,” Frind said.
“If anyone is jumping on the global-warming bandwagon, it’s him, with all his land acquisitions.” •
