New Zealand Wine Sector Subdued But Solid Performance

22 Oct New Zealand Wine Sector Subdued But Solid Performance

With exports constituting nearly 90% of New Zealand’s wine sales, exposure to external market influences such as US tariffs and UK taxes has resulted in growers and producers now facing an uncertain outlook, a concern which is further compounded by a slowing global economy and weaker wine markets in key export locations.

However, despite the introduction of higher tariffs by the USA, it remains New Zealand’s major export market, valued at $762 million, down 3% this past year.

NZ wine producers are also concerned at the impact of the tariffs on the wider USA wine market as they are likely to have a detrimental impact on customer demand, especially as the USA wine market is already struggling.

Overall, NZ wine exports to established markets have been “sluggish with the NZ wine industry experiencing a reduced demand for grapes, leading to lower grape prices. Furthermore, inventory levels have been higher than desired, production costs have increased, as has excise which has risen by 25% in the last four years, impacting the domestic wine market.

Whilst exports were up by 5% in volume over the past 12 months, value declined by less than 1% to $2.10 billion.

The past year has seen the most substantial growth come from emerging export destinations such as China and South Korea, who collectively imported $100million of NZ wine, whilst the USA and Australia also constitute 70% of NZ’s wine exports.

Whilst the export performance is somewhat subdued, in-market sales data consistently shows that NZ wine is outperforming competitors in key markets, which is a positive reflection of the reputation of NZ wine as well as being indicative of future growth potential.

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