Tuesday, 09 February 2016 12:17

$1.5 billion of exports!

Written by  Philip Gregan
Philip Gregan, CEO NZ Winegrowers. Philip Gregan, CEO NZ Winegrowers.

1999 ... $0.1 billion of wine exports, 2006 ... $0.5 billion of wine exports, 2010 ... $1.0 billion of wine exports, 2015 ... $1.5 billion of wine exports!

What a remarkable achievement ... $1.5 billion of New Zealand wine exported, making wine New Zealand's 6th largest export good.

The steady growth in total export value of New Zealand wine over the past decade or so – through shortage and surplus, high dollars (mainly) and low dollars, recessions and booms – has been nothing short of stellar.

It is that growth which has been the number one driver of the industry through that time.

And at its very core that growth reflects the reputation New Zealand wine has in global markets.

Of course the growth in total export value (and the reputation underpinning it) does not guarantee success for any individual exporter but it does provide a platform for individual brands to succeed.

The $1.5 billion year end statistics are worth digging into a little as there are some very interesting trends buried in there ...

The rise and rise of North America

With exports to USA now worth more than $400 million and shipments to Canada valued at over $100 million, this means wine exports to North America are now valued at over $0.5 billion (ie the same as exports to all markets just a decade ago). Export value to the USA has been boosted in recent months by the fall in the New Zealand dollar, but with volume up 13% to Canada and 12% to USA in the past year it is clear the North American market is performing extremely well for our wines at the moment.

With the USA now the largest wine market in the world, success there is very important to the future of our industry. At the moment the signs are looking good indeed.

The UK is back

A few years ago a number of exporting wineries de-emphasised the UK markets given opportunities in other markets, and tough market and regulatory conditions (notably excise increases at 2% above the inflation rate) in the UK. As a result export value to the UK effectively went nowhere between 2009 and 2013. What a difference two years have made. In 2015 volume to the UK is up 4%, but much more impressively export value to the UK is up $100 million in the past two years and is now getting very close to the $400 million a year.

Development markets

Outside the big four markets (USA, UK, Australia and Canada) export volume and value continue to grow steadily. Value to those markets is now $250 million and volume is now 30 million litres – those are numbers which describe the total of all our exports a little over a decade ago. There are many opportunities out there and it is clear wineries are making the most of those whether in Sweden or China or Dubai or wherever.

It is not just Sauvignon!

Sauvignon Blanc is, of course, the major driver of New Zealand's export growth accounting for over 180 million litres or 86% of total export volume.

This makes Sauvignon Blanc exports worth around $1.2 billion by themselves. The importance of Sauvignon Blanc to the industry should never be underestimated ... but it is not just about the dollars. Sauvignon Blanc has said to the world 'New Zealand produces world class wine, take notice!' And the world has.

In 2015 exports of wines other than Sauvignon Blanc totalled around $300 million (for comparison, again, that was the total value of all New Zealand wine exports in 2004).

In 2015 volumes of Pinot Noir were up 11%, Pinot Gris was +12%, Merlot was +9% ...
these are impressive growth numbers and augur well for the future.

$2 billion is not far away!

With the landmark of $1.5 billion of exports under the industry's belt the goal of $2.0 billion is now much closer. Quite when it will be achieved is a matter that only time will resolve but the goal of 2020 does not look far off the mark at this stage. Again it is worth stating that growth in total export value does not guarantee success for individual exporters, but the chances are much better than if total export value was declining.

Tourism is an export earner as well

These export numbers do not, of course, reflect the growing importance of inbound tourism for the industry.

Wine tourism is a growing revenue opportunity for wineries, particularly for small wineries who can find the costs of export market development daunting.

With tourist numbers continuing to surge and the reputation of New Zealand wine growing in international markets, it seems certain the inbound tourists will be an ever more important component of the wine landscape over the next decade.

Congratulations to all those who have made exports of $1.5 billion a reality! Best wishes for the upcoming Vintage 2016. ν


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