The last 40 years of winegrowing in New Zealand have featured a path of continuous growth driven by opportunity in the export markets. From small beginnings, with virtually no exports, the wine industry has expanded to achieve the forecasted goal of $2B of export sales revenue in late 2020, with grapevines being the largest horticultural crop by area in New Zealand.

Despite a few hiccups along the way – such as the occasional significant frost, tropical cyclone, or the global financial crisis in 2008, the growth pattern has been relatively consistent. However, along came Covid-19 and since then it has been a rollercoaster ride; bringing an unprecedented level of uncertainty to forecasting, making it hard to work out what the ‘new normal’ is. Increased consumption during lockdown, followed by a short vintage, shipping uncertainty and inventory building, then de-stocking has made predictions very difficult. So where to from here?

It does feel as though we are at a crossroads now, with the previous expectation of continuous natural growth unrealistic. Our three major markets – the USA, UK and Australia – are approaching saturation where we have significant market share. Can we realistically expect to gain more? There is still some hope for growth in the USA and potential in Asia as we see a change in consumption patterns there. Against this, we are also seeing a global decline in alcohol consumption and increasing competition from alternative beverages (whether alcoholic or not). Thankfully, our flagship variety, Sauvignon Blanc, remains one of the more popular wine styles as it sits in the ‘fresh’ category. While this category continues to grow, we expect to capture a share of that growth. However, if the category is full, or even in decline, then how do we continue to grow our market share? It feels like the easy wins have been had – establishment in English-speaking countries with an existing wine culture. Growing new markets, such as those in Asia, may require a modified strategy.

One thing for certain is that it must be a value-based proposition, rather than volume. As a small country down the bottom of the South Pacific, practising ‘cool climate viticulture’ with its associated risks and high input costs, we cannot compete on price alone. We currently hold a premium price position in all our markets and need to continue to do so and, in fact, grow that position.

Part of the success of the NZ wine industry can be attributed to growth unconstrained by rules and the benefit of a free market economy. We have achieved great success, but now the focus must shift to how we protect that success. Success attracts those who perhaps see a short-term opportunity, rather than a long-term investment, as they jump on the bandwagon and make hay while the sun shines. It has been relatively easy to create a brand, obtain wine and fill an available slot on the shelf – more likely at a lower price point than existing competitors. This can be achieved with little capital outlay and represents a risk to the industry.

The industry has grown to over 700 winery members and just under 700 grape grower members. Business models range from tiny vineyards and garagiste winemakers, to an international drinks businesses with global wine brands and broad acre vineyards. We have a very wide range of business models and philosophies within the membership. In the early days, you could get all interested parties on the same bus (literally) when targeting a new market or discussing an industry issue; now it is difficult to get everyone in the same room, or on the same page, when it comes to the best path forward. This is where finding like-minded individuals or businesses who share common beliefs or goals to share the load can help immensely. Appellation Marlborough Wine is an example of this (see final paragraph) and there are numerous others whose focus may be on a particular sub-region, grape variety, or growing philosophy. The wine industry has always seen the benefit of a collaborative approach, and these common interest groups will be critical to success going forward.

So, what will help shape continued success for the wine sector? We must focus on quality over quantity and premiumisation rather than commodification. Our flagship variety, Sauvignon Blanc, must remain strong, and we must take advantage of the other vibrant, fresh, and delicious wines we can make throughout New Zealand to add diversity to our portfolio.

‘Appellation Marlborough Wine’ was formed in 2018. AMW was founded by a group of concerned wine producers who saw a risk of losing value in the Marlborough wine brand. It was the time to introduce some rules around production to protect quality and provide a path for those with similar aspirations. AMW will now certify wines against a set of criteria that includes yield, taste, ripeness (minimum Brix) and provenance, and to be certified the wines must be bottled in New Zealand – not offshore. The group now has over 50 members and over 130 certified wines. Certification allows members to differentiate their wines by saying they are made to a higher standard, which will provide assurance of quality and provenance. Collectively, the suite of standards provides a compelling message to potential buyers. Membership is open to all who aspire to the same standards. www.appellationmarlboroughwine.co.nz