Unfortunately, the domestic market is unlikely to soak up the excess. According to an April report by Ipsos, one in four New Zealand households are finding the cost of living crisis difficult to manage. Nearly half (47%) are worried about job security, and 83% of those are spending less.
Not surprisingly, New Zealand Winegrowers reports that sales in the domestic market have dropped by 8% to 78.9 million L, the lowest level in the past two decades.
There are bright spots
All the bad news must come as a shock to a sector that has expanded, year after year, as the world seemingly couldn’t get enough of its Sauvignon Blanc, which represents 80% of the entirety of New Zealand’s grape production.
European consumers may now be able to buy it for less, thanks to a Free Trade Agreement signed between the EU and New Zealand in May 2024; wine is now tariff free.
Hilmar Naubert, co-founder of vinabonus, importer of New Zealand wines, said Germany played only a minor role as a market, until 2018.
“In 2019, however, exports quintupled and in 2020 they rose again by almost 100%,” he said, noting that while volumes declined after 2022, Germany remains the fifth most important export market for New Zealand; from the German point of view, New Zealand is in tenth place in the ranks of importing countries.
“The import volume has stabilised at around 10m liters — roughly 0.8% of the total import volume and about 1.2% in terms of values.”
Naubert noted that most imports are bulk Sauvignon Blanc that is blended and bottled in Germany, and then sold primarily through the discount retailers. Hilmar also believes that most consumers don’t know very much about New Zealand and the full range of wines it offers.
“We focus on premium Sauvignon Blancs from quality wineries such as Dog Point, te Pa or Lawson’s Dry Hill — wines with character and origin,” he said, while noting that New Zealand also produces high quality, excellent Pinot Noir that is good value for money, along with outstanding Bordeaux blends and Chardonnay.
But, he added, “Current times are challenging for us as well. Global consumer restraint in purchasing and drinking, along with market disruptions, have not spared our segment.”
Dining and Cooking