Pain is coming for the country's wine industry. Photo / 123RF
Pain is coming for the country's wine industry. Photo / 123RF
New Zealand wine is flying off shop shelves here and overseas as a comfort "affordable luxury" in the coronavirus blight - but for some wineries in the $2 billion sector the outlook could be bleak, says New Zealand Winegrowers.
Chief executive Philip Gregan said the industry organisation is keeping inclose touch with its members and key offshore markets and the picture is very mixed.
"For New Zealand wine in supermarkets and where people are selling for off-premises consumption, in general terms they've seen very strong sales.
"People are stocking up on wine alongside other products. I have a photo of the New Zealand wine section in a Sainsbury's store (in the UK) last weekend and there was hardly a bottle left.
"We're hearing similar things out of the US and Australia and New Zealand."
Gregan agreed the wine sales were comfort buying.
"The expression used is 'affordable luxuries'. A bottle of wine at home is an affordable luxury. If people are going to end up locked up in their houses, as they are in parts of the US and UK, having a glass of wine in the evening becomes an affordable luxury people can look forward to."
Gregan said he was also getting reports of strong online wine sales in New Zealand and overseas.
But the situation is darker for wine sellers to the hospitality industry, hard hit by the virus.
On-premises sales are suffering and the tourist slump has hit the winery cellar trade.
"We get something like 700,000 international visitors through winery cellar doors in the course of a year. Obviously there's not going to be anywhere near that so there will be a significant effect there as well."
Of New Zealand's 700 wineries, 300 sell only on the domestic market. Gregan said the industry was valued at $2.4b - $1.9b of which was from exports.
No projections were yet available for the likely impact on these businesses or the industry, he said, but "some of our members will experience a considerable degree of pain, that's inevitable".
ASB senior rural economist Nathan Penny said he is concerned about the pandemic's impact on the New Zealand wine industry.
Philip Gregan, chief executive of NZ Winegrowers Photo / File
As people lose jobs and household budgets shrink they would not be buying wine ahead of other food and beverages, he said.
Gregan said the sector's peak season was summer and into autumn.
"I think our wineries had a good December and January. Probably into the latter part of February they may have started to see some impact and for March they are going to see an impact."
New Zealand's wine harvest is under way now.
"It's looking to be an absolutely brilliant vintage."
"Fantastic" weather around the country had brought drought for many areas but grapes liked drought, he said.
The industry uses a lot of hand pickers and while Gregan understood wineries had enough labour for now the situation could change rapidly, he said.
Border closures and restrictions around the RSE (Recognised Seasonal Employer) scheme could mean they experienced the same labour shortages as other horticulture industries such as kiwifruit which depended on tourist backpackers and seasonal workers.
The wine industry normally used 14,000 RSE workers a year.
The wine industry employs more than 7000 full time equivalents and supported around another 13,000 people in service sectors, Gregan said.
New Zealand's wine growing area covered 38,680 hectares last year, according to the Ministry for Primary Industries. That was 600ha or 6 per cent up on the previous year.
MPI forecasts pre-pandemic were for wine exports to rise 1.1 per cent for the year to end June.
Rose has been the fastest growing grape category and has passed chardonnay, to reach 4th position in 2019 behind sauvignon blanc, pinot noir and pinot gris, MPI said.
New Zealand's main export wine markets are the UK, US and Australia.
