Trade Deal: Good news for wine exports

"It is a good news story, even if we have yet to fully understand how it is going to play out," says Trinity Hill Wines Chief Executive Rebecca Poynter. "On the face of it things look great, particularly for those of us established in the market."

The new agreement, announced in November, would remove tariffs on wine exported to the United Kingdom, which is New Zealand's second largest export market for wine. Exports to the UK were valued at over $400 million over the past 12 months.

Rebecca says volumes of Trinity Hill wines sold in the UK had significantly picked up in the second half of 2021, since that market had come out of lockdown. "It is fantastic for us to see a great uptake in sales with on-premise coming out of lockdown, but margins are quite tight, even with increasing our sales significantly. The new free trade agreement (FTA) will hopefully help to make exporting a more profitable exercise.”

Palliser Estate Chief Executive Officer Pip Goodwin agrees. She saw the new FTA as a way to help New Zealand wine producers keep their price points up. “We’re definitely not going to be giving the saving back to the consumer. We will be clawing back a little from what we save, due to this agreement.” The UK is a highly competitive market, she says. “It is the lowest margin market for us and, with the exchange rate, it’s really tough to make decent margins, so this is fantastic news. It will help to make a little more profit from the hard won position we’ve gained there.”

The removal of tariffs would also see an immediate ease in the burden of administration currently borne by New Zealand wineries exporting to the UK, says Yealands Chief Executive Officer Tiffani Graydon. “It provides ease of doing business, which obviously has a financial benefit to us all, but it’s not a linear equation, in terms of how much more money we make per 100l of wine exported… The agreement basically removes current tariffs that are paid based on importation into the United Kingdom, but exactly who pays the tariff can vary, depending on whether you are sending bottled goods out of New Zealand or wine in bulk.”

Yealands exports both bulk and bottled wine to the UK and Tiffani says, overall, the tariff removal is positive for the New Zealand wine industry and the company she represents. “A lot of the detail around timing has yet to be established but it is welcome news, because in the context of any New Zealand business in the supply chain at the moment there are big challenges, so anything that shines a light on easing the way forward is very positive.

“New Zealand wine is a very mature market in the United Kingdom and Marlborough Sauvignon Blanc is very well represented there, so it can only be positive from that perspective.” Both exporters and importers would end up saving from the tariff removal, she says. “Whether you’re in New Zealand or the United Kingdom, everyone is incurring increased costs, so where we can we absolutely want to provide our wines into the hands of consumers all around the globe at the best price possible. This can only have a positive outcome in that regard.”