How the wine industry is faring amid tariff uncertainty

Tuesday, 7 October 2025

The grapes have been plentiful, but the customers are drinking less, and with the imposition of tariffs by the US and costs going up, the wine industry is on high alert.

The 15% tariff slapped onto the more than 100 winemakers who export to the US and the rising cost of living here helping dry up demand for wine and it’s “definitely very hard times”, Rachael Carter of Waiheke-based Soho Wines told The Post.

Carter described the season as one of the worst since 2008.

“The wine industry has been hit really tough. All of our cost of goods are going up, and then you've got to put that onto the customer, but the customer is also going through a hard time,”

“It's like this bad waterfall effect.

“This year was a particularly large crop, so a lot of people have wine in tank that they can't move. I've heard of people just draining wine from tank and a lot just dropping grapes to the floor

This year the yield was up 10% on normal levels, after good growing conditions through last year’s spring and summer, compared with a crop down 10% on normal levels last season.

But consumption is on the decline - 91.4 million litres of wine was drunk in the year to June, down from 95.3m litres in the same period in 2024. Overall the annual consumption level of pure alcohol in NZ was 7.6 litres per head of population in the year to June down from 7.74 litres a year earlier and 8.92 litres in 2021.

And wine remains the third choice for many drinkers. About 283m litres of beer and 92.2m litres of spirits were consumed in the year to June.

Younger millennial consumers are increasingly opting not to drink wine, preferring no- or low-alcohol offerings. Older generations are also now drinking much less wine.

As well, the rise in costs has also been crippling some operators, Carter says.

It was, she said, the first year in her 16 years in business that she has seen people willing to let grapes spoil.

Carter, whose vineyard is one of 30 vineyards and 12 wine brands on Waiheke Island, predicts there will be casualties and wine brands would inevitably go under.

“It’s really unfortunate. Wine is a passionate industry.”

New Zealand Wine Growers Association chief executive Philip Gregan accepts there are a lot of challenges for the industry right now, but New Zealand wine was “in good health”.

“We've had a great season that's produced a significant quantity of wine. To sell that wine profitably in market, that's the immediate challenge confronting the industry,” Gregan said.

Just under 90% of the wine produced in New Zealand is exported offshore, with the United States the biggest buyer of Kiwi wine, worth over $750 million per year.

Now the more than 100 New Zealand wineries that export to the world’s largest economy are looking to increase sales into other markets to minimise the impact - or expected impact - from the US government’s 15% tariffs on New Zealand exports.

Gregan said the tariffs were affecting the industry - but to what extent - was not yet clear. “It certainly has created a lot of uncertainty about the future direction of sales in the industry simply because nobody knows what's going to happen. Tariffs are taxes, and taxes tend not to be good for the growth and development of markets.

“All we can do at the moment is watch and wait to see what happens.”

Sommelier Alex Judd is also positive about what’s ahead for wine.

Judd, the son of the owners of Greywacke Vineyards, was raised among the vineyards of Rapaura in Marlborough, surrounded by a world of viticulture and winemaking.

While winemakers were no doubt facing challenges, he said, his family’s smaller brand was “in a sweet spot”.

“You do need to put in some hard work, especially in a tougher economic environment, because wine doesn’t just sell itself.

“The way you get customers is by going into the market, making sure people dine with it and have experiences they won’t forget,” said Judd.

As well wine brands needed to understand what consumers wanted today to make sure they were meeting expectations. To do that would mean more innovating, and perhaps more lower alcohol wines, Gregan said.

“We've seen growth in zero alcohol wine sales, for example. But we're seeing innovations and on things like packaging; wine in cans and other innovations; they are important [for attracting new consumers].”

Soho Winessells most of its product for New Zealand consumption with about 40% of its sales are export.

Carter’s wines are exported to countries such as Denmark, Thailand and South Korea. The brand has diversified by opening a cellar door and restaurant on its property to supplement its income.

Carter said she had been around long enough to know the industry always evens itself out, and wine sales will pick up. She believes a good summer will help move a lot of product people are sitting on.

Outlook for NZ wine

Despite current challenges, Gregan said the industry was optimistic about the medium to long term opportunities for growth.

“When we look forward beyond the immediate term, the reputation for our New Zealand wines is strong. Wine drinkers are moving towards lighter, refreshing styles of wine, and that's what we produce well in New Zealand, so we are optimistic.”

Older generations were drinking less, particularly in the US and New Zealand, but in other countries the market for wine was growing, he said.

Carter said: “I've seen so many trends come and go and I think wine will make a comeback. Younger people, whilst they're not drinking it now, will in time.”