New Zealand Wine Industry

New Zealand Wine industry is relatively new globally, but it has built a reputation of quality over the years. The country started producing wine for export in the 1980s, but the early history of NZ wine dates back to the 1800s when people would grow grapes in family vineyards. The wine produced was solely for local or personal consumption, and it never saw the light of the international market. 

Factors such as the remote location of New Zealand were inhibiting factors to the growth of the country's wine industry. However, in the mid-1980s, farmers began the large-scale growing of grapes. During this period, New Zealand penetrated the world wine economy and quickly gained popularity and acceptance worldwide.

What is the value of New Zealand's wine industry?

Within the five years since New Zealand started wine export, the numbers reached approximately 20 million dollars, and today, the export industry is at an estimated $2 billion. However, the industry's revenue has slightly declined over the recent years. The decrease in exports is primarily due to the poor weather conditions and the pandemic. 
Wine production volumes decreased by about 19% in 2021 due to the impact of the pandemic. For this reason, producers face the challenge of keeping up with the demand.

Despite the difficulties in the supply chain, there is still rising demand for the wine due to the quality and distinctive flavors of New Zealand wine that most consumers resonate with. Regardless of the pandemic's uncertainty, the order for the premium product remained steady because of the trust cultivated trust between the industry and its consumers. 

Examples of the popular wines that New Zealand exports include Sauvignon Blanc, Chardonnay, Pinot Gris, Pinot Noir, and other white and red wines. 

Challenges facing the wine industry in New Zealand

Because of the smaller harvest in 2021, the wine industry faces the formidable challenge of managing the resulting supply constraints. Since the product is not enough for all the wholesalers and retailers, wineries are torn between who they should supply their products to. The pandemic effects have also caused an increase in production costs, primarily due to transport logistics. The industry largely relies on sea-freight, which now costs more than double. 

COVID-19 measures such as closing New Zealand borders have negatively impacted the wine's export market. For example, it has led to a labor shortage – skilled workers are inadequate and especially essential during the industry's peak seasons. Changes such as reopening the borders will allow the industry to stabilize.

To satisfy market demand, wineries need to increase wine production, which is only practical if there is an adequate workforce. International order and the overall value of New Zealand wine are expected to grow over the next five years. However, this can only occur if there is no prolonged period of the border closure.