NZ on track to hit $2bn target as exports grow 10%

New Zealand wine exports have grown for a 21st consecutive year, rising 10% in the past year to just under NZ$1.6 billion.

The US is now New Zealand’s biggest export market

It means that the country is “well on track” to reach its target of $2bn worth of exports by 2020, according to Steve Green, chair of New Zealand Winegrowers, which published its 2016 Annual Report yesterday.

“The on-going progress towards the $2 billion goal is founded on our reputation as a wine exporter of the first rank, known for crafting and marketing distinctively New Zealand, high quality, high value wines,” said Mr Green. “This continued strong performance is testament to underlying market and consumer demand for our wines in key markets.”

In addition to strong export growth, the value per litre of New Zealand bottled wine also increased, lifting by 7% to $8.81 per litre, while the price per litre of bulk rose by 14% to $4.30.

US driving export growth

This growth was achieved despite supply constraints imposed by the smaller 2015 vintage and the “material drop” in the level of the $NZ against the $US.

The US is now New Zealand’s biggest market, driving much of its export growth in the past 12 months.

“North American markets were the major driver of export growth in the past year as wineries, facing supply constraints, directed supply to the most profitable markets”, added Green. “Exports value to the USA grew 24% this year and, at $461 million, it is now firmly established as our largest market. Similarly exports to Canada lifted 13%. Growth was also strong into the United Kingdom with export value up 8% to $382 million,”

Germany, while exports are only worth $14.5m, saw its value increase by a massive 45% – the biggest growth seen in New Zealand’s biggest export markets. In contrast, exports to Australia fell flat as wineries diverted limited supplies to other markets in response to a “high exchange rate and the slow Australian economy”, while New Zealand’s domestic market saw volumes decline by 7% to 56.3m litres.

The 2015 harvest, which amounted to just 326,000 tonnes, was 27% down on the record 2014 vintage, which in comparison yielded 445,000 tonnes of grapes. At the time, 2015’s low yields sparkled fears of a Sauvignon Blanc shortage and has continued to impact the industry’s export strategy.

Further 10% growth expected

Fortunately, the year ahead will see supply constraints eased, with the 2016 vintage up 34% on 2015 producing 436,000 tonnes, just shy of the country’s record 2014 harvest.

“With demand strong in key markets, further export growth is forecast for the year ahead”, said Green. “Improved supply from Vintage 2016 is expected to lift export volumes 10% over the next 12 months. This will be another significant step towards our $2 billion export goal.”

Of New Zealand’s total exports, 85.6% were made up of Sauvignon Blanc, with the remaining 14.4% other varieties.