Regional Growth Supporting Global Success of Kiwi Wines

Regional Growth Supporting Global Success of Kiwi Wine Industry

• 2017 wine industry financial benchmarking survey shows profitability and strengthening balance sheets

• Wine industry makes diverse contribution to regional communities across New Zealand

• Opportunities exist for wine businesses of all sizes through new and emerging export markets as well as through tourism and online channels

Auckland, New Zealand, 18 DEC 2017 – The New Zealand wine industry continues to show sound financial metrics in 2017 on the back of profitability in all but the smallest wineries and strengthening balance sheets, positioning wine companies to take advantage of future growth opportunities.

The 2017 Wine Industry Benchmarking and Insights survey report, entitled Ripening Opportunities, released today by Deloitte and ANZ Bank, tracks the financial results of 45 survey participants accounting for 56% of the industry by litres of wine produced, and 41% by export sales revenue generated.

Deloitte partner Peter Felstead says that, in general, the survey results show that profitability increases with size, however there are exceptions.

“In line with previous year’s results, we see the impact of economies of scale enabling larger operators to experience a lower relative level of cost of goods sold and overheads as a proportion of revenue. Additionally, the survey results show the focus and demand of different grape varieties among different sizes of wineries.” says Mr Felstead.

“On the other hand, small producers experience greater premium price points on average compared to their larger counterparts, he adds.”

In total, 254 million litres of wine were exported in 2017, accounting for $1.66 billion in export revenue.

Export volumes of New Zealand wine to the “big three” markets (Australia, the UK and USA) grew 19% over the previous year to top 200 million litres for the first time in 2017. Meanwhile, other offshore markets also grew in volume while experiencing a 34% higher price point than the “big three” markets.

ANZ Commercial & Agri General Manager John Bennett says the report highlights the wine industry’s diverse contribution to regional communities across New Zealand.

“While the production base remains very much Marlborough centric, the contribution to regional communities across New Zealand via wineries, cellar doors, and growing operations is spread across ten regions,” says Mr Bennett.

“The synergistic relationship between the wine and tourism industries is especially exciting and rapidly evolving. Wine tourism – both domestic and international – remains a key growth market for Kiwi wineries and is particularly accessible to smaller producers. And the tourism outlook is bright on a number of fronts including airline arrivals and spend, notably with China becoming our most important tourist market.”

Overall, the solid financial performance of the New Zealand industry paves the way for wine businesses of all sizes to take advantage of opportunities for growth, including through new and emerging export markets, growth in wine tourism, and other opportunities presented by digital channels.

Felstead and Bennett both extend their thanks to those that took part in this year’s survey.

“We hope the individual benchmarking reports provided to participants will support the best possible decision making in the industry. We are great believers in the power of information to help businesses assess their own performance and identify opportunities for growth.”

To read or download the full report, Ripening Opportunities, go to www.deloitte.com/nz/wine.

ENDS

About the Survey

The survey was conducted between September and November 2017 and is based on 2017 financial statements. The survey is designed to assist wine businesses by providing an insight into the relative efficiency and financial performance of their business – information to aid decision-making, to support and sustain growth, or to assist capital raising initiatives. Survey questionnaires were sent to all members of New Zealand Winegrowers.

About Deloitte in New Zealand

Deloitte New Zealand brings together more than 1200 specialist professionals providing audit, tax, technology and systems, strategy and performance improvement, risk management, corporate finance, business recovery, forensic and accounting services. Our people are based in Auckland, Hamilton, Rotorua, Wellington, Christchurch, Dunedin and Queenstown; serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow. For more information about Deloitte in New Zealand, go to our website www.deloitte.co.nz.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Deloitte provides audit & assurance, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights and service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 264,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn or Twitter.

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