New Zealand’s largest wine region is bracing for a prolonged downturn, with growers cutting production and facing mounting financial pressure. Some industry leaders warn the road back to profitability will be slow, despite signs of global demand.
One of the region’s most senior accountants believes the next few years are going to be “so dire” for the wine growers of New Zealand’s Marlborough district. Anton James & Co managing partner Anton James said every grape grower he had spoken to was looking to cut production, such as by mothballing vines in the wake of falling demand and lower prices.
The surprise was not necessarily what James said, but the forum to which he delivered his thoughts.
As treasurer of the Marlborough Civic Theatre Trust, he had just presented his annual report but then launched into a grim forecast for the region’s wine industry, where his practice has many clients.
Growers cut costs as financial pressure mounts
Effectively he was pleading with the local council to cut rates on vineyard properties. “The next three years plus is going to be so dire”, he said.
“If you’re a grape grower, you’re not paying tax for the next five to six years. The losses you’re making this year, next year, and the following year will take five years to unwind in terms of the prices you get per tonne and what they can produce.
“No grape grower can afford to spend money on anything extra; they’ll be looking at how they can cut costs. That affects everything, every person in the economy.”In the past few years, property values had nearly doubled, and growers had been paying up to 40% more in rates, he said. “But those land values are coming back 40% from what they were … without a doubt.”
If rating values were not pared back, his clients would be “doomed”, he said, and the impact on Marlborough’s economy would be “worse than after the GFC”.
Industry leaders call for supply and demand rebalance
Wine Marlborough general manager Marcus Pickens told Local Democracy Reporting: “It’s no secret Marlborough’s wine industry needs to rebalance supply with demand. I would be surprised if anyone in that audience found anything that Mr James said as a surprise,” he said.
“There’s some challenges for us to rebalance that supply and demand.” He predicted that rating values on vineyard land would come down to ease pressure on growers, but by how much would be up to the council.
“Land values are very closely tied to market performance and that is under pressure at the moment,” he said.
Offering a more positive view on things, Philip Gregan, New Zealand Winegrowers CEO told db, “Demand for New Zealand wines is strong in all our key markets, and we continue to perform ahead of our competitors which is a real positive for producers. However, the fact our industry is facing some challenges at the moment is well known. Our Annual Report last year was very clear on those challenges.
“From a supply perspective we have had our three largest ever vintages over the past four years which represents a sales challenge during a time of high uncertainty. From the grape perspective that has meant lower demand and prices.”
Long-term outlook remains positive despite challenges
However, the long-term outlook was positive, Pickens said. “There are signals that there is a lot of demand for New Zealand wine at the moment, which is great.”
This year’s harvest had benefited from good weather in the past month and, as in 2025, growers would only harvest the very best fruit as the industry strived for the “critical factor” of rebalancing supply with demand.
“There’s going to be a long road to restoring profitability, that is the big challenge. And that does take some time, to work through trying to rebalance, remove unprofitable sales from the system,” Pickens said.
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