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Demand for NZ wine shows no sign of slowing

Strong international demand for New Zealand wine is reflected in the higher value of exports in the latest quarter, but the country's wineries also face significant challenges, trade body New Zealand Winegrowers has said.

Global demand for New Zealand wine saw exports rise by 9% to NZ$599m (£315m) in the first quarter of the new export year, to the end of September 2021, according to the latest data from New Zealand Winegrowers (NZW).

A higher price per litre saw the average value of export wines rise by 4% for the three months, versus the same period of last year, but NZW also reiterated that managing tight supplies was a key challenge for wineries.

‘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,’ said Philip Gregan, CEO of NZW.

‘It is encouraging to see that during these uncertain times, consumers continue to choose a premium product they know that they can trust.’

Exports of New Zealand wine dropped by 3% in volume on a year-to-date basis to the end of September 2021, reflecting reduced supply.

Although NZW said the quality of the 2021 vintage was ‘exceptional’ throughout the country’s wine regions, the overall harvest was much smaller than hoped for.

A total of 370,000 tonnes of grapes were harvested during the vintage, down 19% drop on the 2020 crop.

‘Successfully managing the market impacts of the resulting supply constraints is a key focus for many in the New Zealand wine industry,’ said Gregan. ‘Wineries are having to make tough decisions over who they can supply in their key markets.’

Higher production costs, the ongoing economic impact of Covid and strained supply chains have also continued to impact growers and wineries, NZW said.

It also said a projected labour shortage and unavailability of skilled workers due to the ongoing closure of New Zealand’s borders remained a ‘key concern’. These workers play a ‘vital role’ in enabling the industry to meet the critical seasonal work peaks, the trade body said.

‘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,’ said Gregan.

‘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,’ he said.

NZW added that wine businesses that sell predominantly through the hospitality and tourism sector continued 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,’ said Gregan.

On a positive note, he said NZW had seen more New Zealanders visiting cellar doors, but that there were ‘long, lean periods’ outside of the traditional Kiwi holiday period.

Covid 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,’ said Gregan. ‘Unfortunately, this is a worldwide problem without any quick fix.’

Other countries, notably France, Spain and Italy, have also seen smaller vintages in 2021, according to the latest estimates on world wine production from the International Organisation of Vine & Wine.

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