International demand for New Zealand wine shows no sign
of slowing, with export value reaching $599 million in the
first quarter of the new export year, up 9% on the previous
year. The demand for New Zealand wine is also reflected in
an increase in price per litre, with the September quarter
2021 average value up 4% from September 2020.
“The
ongoing demand for New Zealand wine has proven that the
distinctive flavours, quality and sustainability of our
wines increasingly resonate with consumers around the world.
It is encouraging to see that during these uncertain times,
consumers continue to choose a premium product they know
that they can trust,” says Philip Gregan, CEO of New
Zealand Winegrowers.
Although the quality of the 2021
vintage was exceptional throughout New Zealand’s wine
regions, the overall harvest was much smaller than hoped
for, with 370,000 tonnes of grapes harvested during the 2021
vintage – down 19% on last year’s crop. This reduced
supply is reflected in the decrease in volume of exports,
with YTD September 2021 exports down 3% on the previous
year.
“Successfully managing the market impacts of
the resulting supply constraints is a key focus for many in
the New Zealand wine industry. Wineries are having to make
tough decisions over who they can supply in their key
markets.”
In addition, increasing production costs,
the on-going effects of COVID-19 on the border and markets,
and strained supply chains, have continued to impact growers
and wineries.
The projected labour shortage and
unavailability of skilled workers due to the ongoing closure
of New Zealand’s borders remains a key concern, as these
workers play a vital role in enabling the industry to meet
the critical seasonal work peaks.
“With ongoing
uncertainty at New Zealand’s borders, our industry is
working hard to attract new people to our sector, to ensure
we have the personnel in place to bring in the 2022 crop, to
make our premium wine, and complete winter pruning. The
recent decision to allow quarantine free travel for RSE
workers is positive, and we continue to work with government
to ensure that they are aware of the impact labour shortages
will have on our members if they are not able to attract the
workforce they need.”
Wine businesses that sell
predominantly through the on-premise and tourism sector
continue to experience significant
challenges.
“Domestically, restrictions on
operations of hospitality businesses are a major stress
point for wineries dependent on that sector. Cellar doors
have been hit hard by the collapse in international tourist
numbers, as well as the impact of current restrictions on
regional travel. Positively, we have seen more New
Zealanders visiting cellar doors, but there are long, lean
periods outside of the traditional Kiwi holiday
period.”
COVID-19 has also greatly impacted the
supply chain over the past year, with the ability to ship
products to market becoming an ever-increasing
concern.
“Like every industry dependent on
sea-freight, the ability for New Zealand wineries to ship
products to market has been greatly impacted, as transport
costs more than double and shipping reliability plunges.
Unfortunately, this is a worldwide problem without any quick
fix.”
