New Zealand’s wine industry: Strong global presence amid challenges

By James Bayley

Published: 30 September, 2024

The past year has been a “rollercoaster ride” for exports, as noted in The New Zealand Winegrowers Annual Report 2024.

Despite the initial decline in exports from July to January, shipments rebounded, and by June 2024, exports had increased by 6% from their January lows. This resulted in an annual export total of NZ$2.1bn, the second-highest level for the industry, albeit down 11% from last year’s record-setting figure.

“In our key markets, such as the US and UK, sales of New Zealand wine have grown in the past year, despite flat or declining markets for wine overall,” the report states. This highlights the positive reputation and standing of New Zealand wine in the international market, particularly in the UK, where New Zealand’s wine has maintained its appeal despite broader market challenges.

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A significant development for New Zealand’s wine industry in 2024 was the ratification of the New Zealand-European Union Free Trade Agreement (NZ/EU FTA). This agreement has removed all tariffs on New Zealand wine exports to the European Union and introduced additional flexibility on labelling and winemaking practices. The agreement is expected to strengthen New Zealand’s access to the lucrative European market, which is crucial for future growth.

As the “most export-focused of all major global wine producers,” New Zealand’s wine industry relies heavily on its international presence, with nearly 90% of total wine sales occurring overseas. The UK remains a pivotal market, and the continued engagement through trade events and partnerships with Wine Australia has enhanced its profile. Collaborative trade events held in Denmark, Sweden and the UK in 2023 have been instrumental in reaching target audiences more effectively. “This has been extremely well received by all sectors, and more collaborative events are planned for 2024-2025,” the report notes.

However, the domestic market tells a different story, with wine consumption in New Zealand showing a notable decline. Total domestic wine sales were down an estimated 8% to 78.9 million litres, the lowest level in two decades. On a per capita basis, wine consumption has decreased by over 20% in less than a decade. Factors such as demographic changes, increased regulation and additional restrictions around the sale of wine due to new interpretations of the law have contributed to this decline.

Cost increases have also been a major concern for the industry. “Consecutive excise hikes two years in a row have taken the excise rate to NZ$3.69 per litre, up more than 11%,” the report states. This has resulted in excise on wine sold in New Zealand amounting to over NZ$290m per year. Additionally, the Alcohol Health Levy has increased by 47%, further squeezing profitability for growers and wineries.

Despite these challenges, New Zealand’s wine industry remains optimistic about the future, focusing on sustainability and research to ensure long-term growth and stability. The report highlights that new vineyards are being planted and significant investments are being made to enhance sustainability practices and innovation in winemaking.

Research continues to play a crucial role, with the Bragato Research Institute (BRI) leading efforts to address industry challenges such as climate change and genetic diversity. The report mentions the launch of the “Roadmap to Net Zero 2050” initiative, which outlines steps to reduce greenhouse gas emissions across viticulture and winemaking activities. The BRI is also exploring new planting materials to meet the challenges of climate change and improve the resilience of the industry.

Another key focus is on supporting trade and building markets. New Zealand Winegrowers has collaborated with organisations such as New Zealand Trade and Enterprise (NZTE) to promote the New Zealand wine brand globally. The UK remains a critical market, with events like the New Zealand Wine Annual Trade Tastings in London and Dublin attracting over 500 guests. The report states that this year’s return on investment for the Global PR Programme exceeded expectations, generating NZ$80 for every NZ$1 spent.

Overall, the New Zealand wine industry is navigating a complex landscape with confidence. The chair’s report summarises the industry’s outlook: “The goal for all continues to be enhancing the reputation of New Zealand Wine and the sustainability of our industry.”

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