Victorian Statutory Revaluation
Valuer-General Victoria and Municipal Group of Valuers
Guidelines on Valuation Methodology for
Major Wineries and Vineyards
Introduction
These guidelines are to be used when valuing major wineries and vineyards for rating and
taxation purposes.
The guidelines need to be used in conjunction with the General Provisions for Specialist
Guidelines, which refers to the general requirements, legislation and procedures relating to all
statutory valuations.
Definition
Acceptable classifications for wineries, vineyards and wineries with vineyards are summarised
below:
Winery – land and improvements used for the production of wine. This may also include the
display and sale of vineyard products and the manufacture of vineyard products. It may include
the preparation and sale of food and drink for consumption on the premises.
Vineyard – a plantation of vines grown for the production of either table or wine grapes.
Winery and Vineyard – land used for display and retail sale of vineyard products in association
with the growing of grape vines and the manufacture of vineyard products. It may include the
preparation and sale of food and drink for consumption on the premises.
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Other definitions and industry terms

Geographical Indications (GI) – an official description of an Australian wine zone, region or
sub-region designed to protect the use of the regional name under international law. GI is
similar to the appellation naming system used in Europe but less restrictive in terms of
viticultural and winemaking practices. In fact the only restriction is that wine that carries the
GI must include at least 85 per cent fruit from that region.
GIs are determined by the Geographical Indications Committee, a statutory authority of the
Australian Wine and Brandy Corporation (AWBC), and listed on the Register of Protected
Names, which is maintained by the AWBC.
The GI system was introduced in 1993 to allow Australia to fulfil its agreements with the
European Community on Trade in Wine and the agreement on trade-related aspects of
intellectual property rights. However, GIs cannot be used on exports to the EU or the US until
they also are included on the list of Australian Geographical Applications approved for use in
those markets.1

Zone – an area of land, without any particular qualifying attributes. 2

Region – a single tract of land comprising at least five independently owned wine grape
vineyards of at least five hectares each, and usually produces five hundred tonnes of wine
grapes in a year. A region is required to be measurably discrete from adjoining regions and
have measurable homogeneity in grape growing attributes over its area. 3

Sub-region – a single tract of land comprising at least five independently owned wine grape
vineyards of at least five hectares each, and usually produces five hundred tonnes of wine
grapes in a year. However, a sub-region is required to be substantially discrete within the
region and have substantial homogeneity in grape growing attributes over the area. 4
An application for a sub-region cannot be considered until the region of which it is part has
been entered into the Register of Protected Names.5

Phylloxera (Daktulosphaira vitifolia) – a small sap-sucking insect related to aphids that
infests vine roots. It is a significant issue for grape growers due to production losses and
death of vines associated with its presence, as well as the quarantine restrictions imposed on
vineyards within phylloxera infested zones.
Phylloxera Management Zones have been declared in southern Australia to help prevent its
spread. The Phylloxera and Grape Industry Board of South Australia website at
www.heathyvines.com.au provides maps of the Phylloxera Infested zones (PIZs), Phylloxera
Exclusion Zones (PEZs) and Phylloxera Risk Zones (PRZs).
The National Phylloxera Management Protocol can be found at the Grape and Wine Research
and Development Corporation website at www.gwrdc.com.au > Biosecurity.
Source – www.wineaustralia.com.au viewed August 2011
Ibid
3
Ibid
4
Ibid
5
Ibid
1
2
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
Rootstock – a variety of vine that is naturally resistant to nematode and/or phylloxera attack
(usually native to North America). The variety being grafted onto the rootstock is called the
scion. The scion has properties desired by the propagator and can be described by variety,
e.g. Cabernet Sauvignon and Clone e.g. Reynella. The tissues of the two parts grow together,
producing a single vine; although, genetically it always remains two different plants. Grafted
and non-grafted vines can be purchased from nurseries and are described as follows:
1. Grafted Dormant Vine (field grown for one year and grafted e.g. Cabernet Sauvignon
grafted to, say, Schwarzmann rootstock)
2. Grafted Potted Vine (rootstock that has been grafted and grown in a glasshouse for
planting in late Spring)
3. Own Rooted Dormant Vine (field grown for one year on its own roots – i.e. the whole
vine will be Cabernet Sauvignon, no rootstock)
It is always a good idea to identify the source of the vines and view the certificates provided
by the nursery to confirm both the rootstock and variety.

Climate - climate comprises several factors: temperature, rainfall, humidity, evaporation,
wind, sunshine and frost. Each can have an influence on productivity and should be
considered in the assessment of the vineyard. 6

Trellising – Trellising systems are essential to good fruit production and it is important to
choose the right trellis for the grape variety, soil and climate. Trellises control vigorous vines,
sunlight penetration, spray penetration and air flow around the grapevines. 7
6
7
Ibid
Wine
Diva www.winediva.com.au viewed August 2011
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Additional Victorian legislation and cases applicable to major wineries and vineyards
The following Acts are also relevant to this topic:





Australian Wine and Brandy Corporation Act 1980 (Commonwealth)
Trade Practices Act 1974 (Commonwealth)
Trade Marks Act 1995 (Commonwealth)
Environmental Protection Act 1970
Water Act 1989
Court cases:
There are no known court cases applicable to vineyards and/or wineries relevant to these
guidelines. There are, however, a number of cases that relate to crops in the context of farmland
classifications.
Other relevant material:
The following organisations have brief extracts on their websites, which are cited below.

Australian Government Australian Wine and Brandy Corporation
The Australian Wine and Brandy Corporation is an Australian Government statutory authority
established in 1981 to provide strategic support to the Australian wine sector.
www.wineaustralia.com/australia

Grape and Wine Research and Development Corporation (GWRDC)
The GWRDC is an Australian Government statutory authority funded by wine sector levies
and matching government finance. Its principal role is to fund and manage research and
development initiatives carried out by selected providers to advance Australian viticulture
and winemaking. www.gwrdc.com.au
Grape Research and Development Levy – grape producers contribute to grape research and
development by means of a levy on fresh and dried grapes and grape juice used in the
manufacture of wine or delivered to an establishment for processing. Wineries that grow
their own grapes for winemaking are also required to pay this grape research levy.
The annual statutory levy is collected by the Levies Revenue Service of the Department of
Agriculture, Fisheries and Forestry (AFFA); the funds are transferred to the GWRDC for
investment in appropriate grape and wine research and development.

The Australian Bureau of Agricultural and Resource Economics and Science (ABARES)
The Australian Bureau of Agricultural and Resource Economics and Science is a government
economic research agency noted for its independent research and analysis.
www.abares.gov.au

Austrade
The Australian Trade Commission is represented in more than 140 locations in more than 60
countries and provides advice, support and market intelligence for individual wine
companies. www.austrade.gov.au

Winemakers’ Federation of Australia (WFA)
The WFA is an industry body funded by voluntary levies. Through direct and affiliate
membership it represents more than 90 per cent of Australian wineries and 95 per cent of
wine industry production. Its activities fall into three main categories: responding to industry
demands; promoting the wine industry; and programs to boost Australian wine industry
business. www.wfa.org.au
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
Wine Grape Growers Australia (WGGA)
WGGA is an industry body, funded by voluntary levies, established in 2006 to represent the
political and economic interests of wine grape growers. Its principal roles are government
and industry advocacy, strategic planning and policy development, collaborative industry
sector relationships, industry research and development program direction and overseeing,
and national vineyard biosecurity. www.wgga.com.au

Australian Wine Research Institute (AWRI)
The AWRI is owned by the wine industry and funded primarily by industry levies distributed
through the GWRDC and matching government finance. It undertakes strategic and applied
research and provides a trouble-shooting service and technical advice group.
www.awri.com.au

The Australian Society of Viticulture and Oenology
The Australian Society of Viticulture and Oenology was founded in 1980 as a non-political
organisation to serve the interests of practising winemakers and viticulturists by encouraging
the exchange of technical information. www.asvo.com.au

Victorian Wine Industry Association (VWIA)
The VWIA represents and promotes the interests of the wine industry in Victoria. It is an
independent membership-based sssociation that works closely with regional and national
bodies, and liaises with the Victorian Government. www.winesofvictoria.com.au

Department of Primary Industries – www.dpi.vic.gov.au > agriculture > horticulture >
wine and grapes.

Tourism Victoria – www.visitvictoria.com > food and wine > wineries > wineregions
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Identification of properties
To appropriately categorise major wineries and vineyards in a municipality, refer to the Australian
Valuation Property Classification Codes (AVPCC) available at www.dse.vic.gov.au/valuation.
While there is only one AVPCC code – Vineyard - 561 – there is no specific AVPCC code for a
winery.
The suggested categories for valuation purposes are:




Vineyard
Major winery processing plant
Vineyard and major winery processing plant
Boutique wineries with facilities
Vineyards
Catagorisation of Vineyards can be made on the following basis :

Climate
Climate has a pronounced effect on the process of wine production, and therefore sets the
parameters for the selection of grape variety. The two distinct groups for climate for
valuation purposes are:
o
o
Cooler climate regions
Warmer climate regions
It is not considered appropriate to compare vineyards in different climate regions as the
character, finish, variety and yield of wine grapes is entirely related to the effect of climate.

Scale of operations
The land size, density of vines and vineyard management will all impact on a site’s grape
yield. The valuer needs to ensure that similar scales of operation are compared, particularly
when analysing sales. Demand and prices for grapes will vary depending on location.
The following table is provided as a guide:

Small scale operation
Less than 20 ha
Medium scale operation
Greater than 20 ha and less than 50 ha
Large scale operation
Greater than 50 ha
Wine Regions
The wine regions of Victoria are detailed in the last section ‘Industry Information’. While the
most appropriate comparisons are between sites within the same wine region (of similar scale
of operation), comparisons can be made outside the wine regions providing comparable
climates and scales of operation are considered.
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Property inspection – specific requirements applicable to major wineries and
vineyards

Site attributes:
o confirm land area
o determine title boundaries and number of parcels
o if paddock plan/site plans are available, request a copy
o access and frontage to property
o orientation and topography
o soil types for property and area (ha) for each type
o susceptibility to frost.

Utilisation
o
o
o
of the land:
area (ha) of vacant land suitable for plantings
area (ha) of vacant land unsuitable for plantings
other area (specify) e.g. area occupied by dams.
Note: Total area may not equal total land area of site as headlands (area required to turn
machinery usually 1/9th of planted area) may not be included in the planted area.

Investigate what are the plantings on site:
o variety
o year planted
o block/paddock size (of each grape variety)
o grape yield (tonnes per hectare)
o planting density (vines per hectare)
o density of vines
o whether plantings are with disease-resistant rootstock.

Determine the vineyard improvements:
o irrigation system
o dam/underground water supply
o trellising
o fencing
o drainage.

Water resourcing:
o water source to vineyard
o water shares, delivery shares or water use licence
o copies of any documentation
o whether or not the water provisions are adequate for the existing vineyard
o if the site has additional land suitable for planting, whether or not there is
sufficient water available if the additional area were to be planted
o water capacity (and continual water capacity) is very important (It is critical to
match demand with capacity.
o As a guide a minimum of one megalitre is required per planted hectare in cool
climates regions and six megalitres in the warmer regions. Reliable and effective
rainfall will also impact the vineyards water requirements.)
o in considering water capacity, land suitable for planting (but not yet planted)
needs to be investigated to determine if water provisions are available.
Note: Guidelines on Valuation Methodology for the Classification of Land in Irrigation Districts
is a reference point for information on water.
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
Location and description (size, construction, age etc.) of other improvements and facilities
to the site:
o wine production on site or just grape harvesting
o winery
o cellar door
o wine tasting
o restaurant
o accommodation
o function/conference facilities
o entertainment.
Note: The council permit will stipulate items such as restaurant seating capacity, permitted
number of rooms for accommodation and conditions applicable to function/conference
facilities.
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Rental questionnaire – specific requirements applicable to boutique wineries
In addition to the general requirements for rental information, the following is a guide to the
specific information required for wineries that have additional facilities such as accommodation,
restaurant and/or conference centre operating in a commercial capacity.
Components
Year end
30/6/20__
Year end
30/6/20__
Year end
30/6/20__
Total number of rooms for
accommodation
Occupancy rate of rooms
Average room rate
AAA STAR rating/
self assessed rating
Seating capacity per
restaurant
Number of
conference/function rooms
Gross turnover – last three financial years
Please specify if financial data is  Per annum  Per week
Trading components
Year end
30/6/20__
Year end
30/6/20__
Year end
30/6/20__
Accommodation
Food
Beverage
Conference
Other
Sundry e.g. cellar door
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Methodology

Site Value
General Provisions for Specialist Properties outlines the general provisions in determining site
value.
The following are more specific factors that relate to vineyards and may be relevant in
determining the site value:
o
o
o
o
soil types
topography and aspect
cleared
accessibility and exposure etc.
Soil is a critical element in the growing of grapes.
Aspect is particularly important especially in cooler climate regions; land with a northerly
aspect is considered desirable.
Protection from wind and exposure to frost are also key elements for vineyard plantations.

Capital Improved Value
Vineyards
The primary approach used for valuing vineyards is summation.
The primary evidence to use is that of recent sales of comparable properties, analysed by
category, to indicate appropriate market comparisons.
Determinants of value for vineyards
o variety, type and quality of vines on a per hectare basis
o condition of vines/affected by disease
o type of trellising, spacing and density of planting
o headlands – typically 1/9th planted area required to turn machinery
o availability and access to water, drainage and irrigation infrastructure
o a reliable continual water supply is critical to the vineyard that is sufficient to
cater for the area of vines under plantation.
Land suitable for viticulture
o underlying land value (planted and plantable)
o vines
o trellising
o irrigation/ drainage infrastructure.
Land unsuitable for planting
A lower rate should be applied to the land that is unable to be planted.
Examples of types of land that will fall in this category are:
o steep terrain
o bush/dense scrub
o poor soil
o mud flat/severe inundation
o land with no availability to water
o contaminated land.
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Other improvements
Other improvements to may include items such as:
o fencing
o landscaping
o lighting
o paving
o driveways
o windmills
o car parks.
Building improvements
Building improvements on the site may include:
o sheds
o managers residence
o chemical store
o machinery shed.
o Added value attributed as per normal sales analysis for rural improvements.
o Added value should reflect functionality of building, size of building, construction
material, age, quality, condition etc.
Planted Land – rate per hectare per variety of grape (direct Comparison on planted area)
Rate is usually attributed on a PFW (planted, Fenced and Watered) basis, which includes:
o underlying land
o trellising
o irrigation infrastructure
o vines
It is appropriate to apply different rates to different grape varieties.
When determining the appropriate rate, consideration is given to:
o demand for variety (regional average price per tonne for each variety)
o yield (average tonne per hectare)
o quality of variety and rootstock
o condition of vine (disease issues)
o maturity/age of vines
o density of vines and spacing.
A lower rate should be applied to the land that is unable to be planted.
Examples of types of land that will fall in this category are:
o steep terrain
o bush/dense scrub
o poor soil
o mud flat/severe inundation
o land with no availability to water
o contaminated land.
Other improvements
Other improvements to may include items such as:
o fencing
o landscaping
o lighting
o paving
o driveways
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o
o
o
o
o
windmills
car parks
Added value attributed as per normal sales analysis for rural improvements.
Added value should reflect age, quality, condition etc.
Depreciated schedule or discounted replacement cost may be of some use.
Building improvements
Building improvements on the site may include:
o sheds
o managers residence
o chemical store
o machinery shed.
o Added value should reflect functionality of building, size of building, construction
material, age, quality, condition etc.
o Depreciated optimised replacement cost to achieve the same functionality of the
existing buildings.
Summary capital improved value vineyard
Land suitable for planting
+
Land unsuitable for planting
+
Added value of vines
+
Other improvements
+
Building improvements
=
Capital improved value
Or
Summary capital improved value vineyard
Planted land
+
Land suitable for planting, not yet planted
+
Land unsuitable for planting
+
Other improvements (not included in planted land)
+
Building improvements
=
Capital improved value
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Victorian Statutory Revaluation
Determinants of value for a major winery processing plant
The main approach for valuing a winery is summation. The primary evidence to use is recent
sales of comparable properties, analysed by the scale of the operation to indicate appropriate
market comparisons.
The direct comparison approach using a dollar value per crushed tonne is an appropriate
check method.
The tonnage of grapes processed may provide an indication of the scale of operation for
comparison purposes. The grapes processed may or may not be from a vineyard on site,
contracts may be in place from one or more vineyards for the processing of grapes from
other properties vineyards.
The main determinants are:

Underlying land of the winery = site value

Other improvements
Other improvements to the land may include items such as:
o fencing
o landscaping, lightening, paving, driveways
o waste water disposal facilities.
o Added value should reflect age, quality, condition etc.

Building improvements
o Building improvements on the site may include:
o winery
o sheds/warehouses.
Specific issues for winery buildings that need to be considered in applied added value
include, but are not limited to:
o suitability of flooring i.e. satisfactory for heavy machinery, durability etc
o clearances for internal and external access
o whether or not the building clear span or column supported
o accessibility to the building in terms of loading docks and ramps.
o insulation of building – chilled, temperature controlled, humidity controlled or
atmosphere controlled.
o discharge of waste
o size of building
o construction material
o age
o quality and condition.

Plant and equipment
- Fixed plant and equipment (refer to Guidelines on Valuation Methodology for Plant and
Equipment for Rating and Taxation Purposes)
Examples of typical plant and equipment are:
o crusher/destemmer
o fermentation tanks
o wine press
o tank farm (storage vats)
o bottling equipment.
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- Tank farm
o In warm climate regions bulk wine processors have major tank farms of
significant value. The valuer should record as a minimum the tank identification
number and storage capacity. Most tanks are constructed of stainless steel and
modern storage tanks are fitted with insulation, agitator and piped cooling.
o Depreciated replacement cost is a suitable valuation method.
o The concrete plinth under the tank is engineered for weight and wind loads.
Summary capital improved value major winery processing plant
Site value
+
Other improvements
+
Building improvements
+
Plant and equipment (refer to Guidelines on Valuation Methodology for Plant and
Equipment for Rating and Taxation Purposes)
=
Capital improved value
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Determinants of value for vineyard and major winery processing plants
The determinants of value for a vineyard and major winery processing plant include both the
elements outlined under vineyards and winery methodology.
In determining the site value, the valuer should determine the appropriate levels of value for
each component of the enterprise.
Summary capital improved value vineyard and major winery processing plant
Land suitable for planting
+
Land unsuitable for planting
+
Added value of vines
+
Other improvements
+
Buildings
+
Plant and equipment
=
Capital improved value
Or
Summary capital improved value vineyard and major winery processing plant
Planted land
+
Land suitable for planting, not yet planted
+
Land unsuitable for planting
+
Other site improvements (not included in planted land)
+
Building improvements
+
Plant and equipment (refer to Guidelines on Valuation Methodology for Plant and
Equipment for Rating and Taxation Purposes)
=
Capital improved value
Boutique wineries with facilities such as cellar door, restaurant, accommodation
The primary approach used for valuing boutique wineries is the capitalisation of market rent.
The type of facilities boutique wineries often provide are:
o cellar door
o restaurant/cafe
o accommodation
o function/conference facilities
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
Sales analysis
o
The determination of whether or not a sale price includes a winery supply
contract is important as it can inflate a vineyard’s sale price. The valuer should
make enquiries to ascertain if there were any quotas or contract delivery
arrangements with any suppliers for the vineyard’s produce. Winery supply
agreements must be disregarded for statutory valuation purposes.
o
The valuer should ascertain if the sale includes items such as:
 labels (label/brand)
 stock
 business entity.
Appropriate deductions for these items should be made from the sale price.
o
o
There are specialist brokers for vineyards and wineries that may be able to assist
in the analysis of sales. The following website may be of assistance:
www.wineryforsale.com.au
o
It is important to analyse sales with reference to the categorisation previously
referred to so that sales are analysed on a ‘like-by-like’ basis.
o
Interstate sales may be appropriate to analyse if there are insufficient local sales.
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