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Pressing Concerns

by fatweb

By Bridget Gourlay


Not so long ago, a typical Kiwi family on a typical weekend drive had two lunch options; pies and a cuppa at a roadside diner, or something deep fried with a brew at a pub. How times have changed.

In the last decade or so, the rise of the café culture has seen New Zealanders turn to fine fare and vino at vineyards dotted around the countryside — and nobody’s looking back.

While there have been a few vineyards about New Zealand since the 1850s, we have only become a serious wine producing nation in the last 20 years.

Some parts of the country have undergone a seismic change — vines grow where sheep used to graze, seasonal shearing work has been replaced by seasonal picking and pruning. Tourism is no longer about country pubs and fluffy lambs, but gourmet restaurants hosting wine tastings.

New Zealand Winegrowers, an industry group, says we hit one billion dollars in exports last year, a stunning achievement for an industry that exported only $100 million of wine a decade ago. Wine adds $1.28 billion to New Zealand’s GDP and $3.5 billion to gross output each year.

Many of our wineries are small, ‘unique and boutique’ vineyards, often run by families or friends with a passion for wine and a bit of Kiwi ingenuity, selling medium to high priced and often well acclaimed wine.

But all this could change because of several factors. Firstly, the recession, like a hard frost, has wiped out several unique and boutique New Zealand vineyards.

NZ Winegrowers CEO Philip Gregan says small wineries need to do what every other company has been doing.

“Everybody has to take a long look at their business model and reduce costs with their growers or at the wineries. We definitely shouldn’t be cutting back in marketing though — in fact, we should spend more than we’ve ever done before.”

The other problem is, there was a supply imbalance out of the 2008 vintage which put retailers in a position of power, with a lot of wine to chose from and the power to deliver great deals to consumers. This stung smaller vineyards who couldn’t afford to sell wine in bulk at such low prices to retailers.

Sheryl Dennis, co-owner of Marble Point Winery near Hanmer Springs says the 2008 over-harvest forced them to keep their sales local instead of expanding, because they couldn’t afford to sell into national restaurants and supermarkets.

“We can’t compete with the prices some people are giving their wine away at. I don’t know how they make money.”

Stock up now

Gregan says now is the time to stock up on cheap wine, because anecdotally the 2010 harvests are closer to the usual demand situation. “The key for vintage 2011 and 2012 is to not produce more than the market can bear, produce in market demand.”

Small wineries have also been hit hard by the increasing excise on wine.

It went up four cents per bottle on July 1, but a New Zealand Winegrowers survey showed 84 percent of vineyards did not lift their prices, instead absorbing the rise themselves. The excise tax has risen 11.6 percent since June 2006.

Dennis says excise tax is an “awfully big” part of their expenses. “Being a new business, we actually pay more excise than GST.”

Dennis feels the New Zealand wine industry is one that needs encouragement, not penalties, because of its benefits to the environment, tourism and the economy.

Philip Gregan agrees. He says small wineries add colour, excitement and experimentation to the industry. “We’re not talking about Coca-Cola here. They’re a statement about New Zealand. Wine is seen as a sophisticated, upmarket, modern product that reflects our country.”

It’s not all bad news for the wine industry, even for smaller wineries that are struggling.

Our wine continues to sell well globally, win international awards and draw tourists. And with emerging middle class markets in China and India beginning to demand wine, this “very hot prospect” according to Gregan, could mean even more stunning export figures.

The rise of an industry

  • Samuel Marsden introduced grapevines to New Zealand at Kerikeri in 1819 and James Busby produced wine on his Waitangi estate in the 1830s
  • French settlers at Akaroa planted vineyards throughout the 1800s
  • Mission Vineyards, established in 1865 in the Hawke’s Bay, is New Zealand’s oldest established vineyard
  • Since 1955 the annual consumption of wine has been steadily increasing
  • In 2000, there were 358 wineries in the country and exports totalled $100 million
  • In 2009, there were 643 wineries and exports hit the $1 billion mark
  • Four bottles of local wine are drunk for each one imported.

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