Wine exports drop so far in 2025 financial year, though total hort exports will grow 12%

Friday, 13 December 2024

The main reasons for the slow export volumes at the start of this season were unclear, MPI said in the report.

Export volumes of New Zealand wine fell 13% in the year to June 2024, and volumes continued to be much slower through the September quarter, leaving local wineries with a surplus of stock.

The Situation and Outlook for Primary Industries December report from MPI said for the start of the current financial year, 4.2 million litres less wine had been exported, and the figure was 24.5 million litres less than two seasons ago.

“It is currently unclear what the main drivers are behind slow export volumes at the start of this season, creating short-term uncertainty for the industry,” the report said. Elsewhere, it said, some global retailers were still de-stocking inventory stockpiled after Covid.

Back in New Zealand, and despite a smaller 2024 vintage, pressure on wineries has not reduced as they are holding more of the 2023 vintage than expected for September: “Only in 2014 have there been higher stocks of unsold Sauvignon Blanc from the previous vintage at this point in the year.”

Cash flows have also taken a hit because of lower yields for the 2024 vintage combined with falling grape prices. All parts of the industry are facing elevated operating costs, further constraining profitability.

Despite these issues, in the year to the end of June, 275 million litres of exported wine generated $2.1 billion in revenue, and strong prices meant the industry still achieved its second-highest export revenue year in 2024. The figure is expected to tick up to $2.2b in the year to June 2025.

International demand has meant Kiwi wine has remained profitable despite rough conditions.

Otherwise, a new report from the Ministry for Primary Industries (MPI) found next year’s total horticulture export revenue is expected to show a 12% increase on this year’s total of $7.1b.

Challenges including the impacts of severe climate events and increasing production expenses caused by higher prices for things like petrol and fertiliser will not stop horticulture exports reaching a record $8b by June next year, due to increasing international demand, the report said.

Kiwifruit exports could go beyond $3b for the first time ever, with apple and pear exports set to exceed $1b.

Fresh and processed vegetable export revenue is expected to rebound, with revenue of $770m predicted next year, up 7%. Cherries are forecast to gain by 7% also, generating $98m. Avocado revenue is also estimated to lift 147% to $91m.

Horticulture New Zealand chief executive Kate Scott says the sector needs Government support to support revenue growth.

But increased costs mean the gains from the increased trade may not flow through to growers for a while yet.

Horticulture NZ chief executive Kate Scott said while the growth in volumes meant “excellent news for growers”, it did not mean growers can expect more money in their pocket.

“It is important to remember that greater export revenue for the horticulture sector does not necessarily translate into greater profitability for growers because they are facing increased costs of production,” Scott said.

She said the sector need help from the Government to protect from climate change events, protect vital growing areas, invest in sustainable land and water use and accelerate research and development.

“The sector remains committed to collaborating with the Government to ensure horticulture’s continued success, benefiting New Zealand’s economy, environment, and communities.”

The report showed that pear and apple growers are now recovering from last year’s Cyclone Gabrielle with demand driven largely by Asian markets. This year, climatic conditions for the crops have been mostly favourable with good fruit set reported.

“If warm weather prevails, this will help increase fruit size and an earlier start to harvest, providing opportunities for early season sales,” the report said.