The Wine Year: Record Exports Tempered by Caution

Friday 28 August 2003

The Wine Year:
Record Exports Tempered by Caution

New Zealand Winegrowers’ Annual Report 2003 has been released today and highlights the key successes of the grape and wine industry over the past year.

Chief highlights of 2002/03 include increasing international recognition for New Zealand wine and the record export performance of the industry.

Commenting on the industry achievements New Zealand Winegrowers Chair Peter Hubscher said “New Zealand wines received numerous accolades in the past year. Those accolades testify to the standing our wines now have on the international stage. Simply put, New Zealand wines now compete with, and are succeeding against, the best the world can offer.”

Mr Hubscher said the international recognition for New Zealand wine was reflected in the industry’s export performance. ”Exports grew 18% in volume in the past year to 27.1 million litres, and reached $NZ 281.9 million, the first time they have exceeded the $1/4 billion mark. The growth continues the trend of recent years, and we expect it to continue medium to long term.”

Short term, however, Mr Hubscher is more cautious about industry growth prospects. “Vintage 2003 at just 76,400 tonnes was much smaller than expected, and will curtail export growth in the year ahead. While there will be greater availability of some wines from Vintage 2002 (notably Chardonnay and red wines based on Pinot Noir, Merlot and Cabernet Sauvignon) the reduced production of Sauvignon Blanc from the current vintage means many wineries will struggle to fulfill export demand in the year ahead. The vintage shortfall is very frustrating for both the industry and our consumers.”

Mr Hubscher’s short term view was also influenced by wider economic issues. “The rise in the New Zealand dollar in the past year is having a demonstrable effect on export returns, which are down from $10.73 per litre for the June 2002 year to $10.39 per litre this year. These lower returns are compounded by higher grape prices, low growth rates in major economies, and the intense competition in international markets make exporting a more difficult exercise than in recent times. We have, of course, no control over these issues and hope these conditions do not endure for any period of time” said Mr Hubscher

Longer term Mr Huscher said the main challenge facing the industry was clear to all. “The vineyard area is expanding rapidly and within five years vintages of 200,000 tonnes or more are a real possibility. With much larger vintages the challenge is simple - we will need to profitably market and sell greatly increased supplies of our premium wines in export markets. This will require a greatly enhanced sales and marketing effort, individually and collectively” he said.

Key Features

Other key features of the 2002/03 grape and wine year include:

- Total sales of New Zealand wine rising to 61.5 million litres, 10% above 2002 and a record for the industry.

- Domestic wine sales rising 1.8 million litres to an estimated 34.4 million litres, although the market share of New Zealand wine in the domestic market was down to 46.2% from 47.7% the previous year.

- The number of growers and wineries in the industry is now over 1,000 with the number of wineries up to 421 from 398 the previous year.

- The largest ever generic promotional programme by the industry valued at over $3.0 million in the past year, and the launch of an even larger event calendar in the year ahead.

The Annual Report also highlights a number of other key industry developments, notably:

- The industry commitment to sustainable grape and wine production through the industry scheme, Sustainable Winegrowing New Zealand.

- The importance of the fair and equitable access to markets as a prerequisite to continued export growth.

- The Wine Bill, currently before Parliament, which will overhaul and upgrade industry specific legislation.

- The industry’s ‘outrage’ at the recent excise increase on fortified wines.

The Annual Report concludes by stressing the importance of growers and wineries working together to address the issues confronting the industry.

“Driving Winegrowers in all activities is a fundamental belief that by working together we can maximise the opportunity for industry success in the highly competitive international wine industry. Growers and winemakers, viticulturists and exporters, we are all co-owners of the brand ‘New Zealand wine’. As such we have a duty to foster the brand ‘New Zealand wine’, and will reap real benefits by doing so” concluded Mr Hubscher.

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