Issues and Trends
Wine exports continue to grow rapidly, totalling 23 million litres and valued at $246 million by the end of June 2002. This represented a 19% increase in volume and a 24% increase in value from the previous year. Exports for 2003 are set for further growth and may be in the range of 27-27.5 million litres by the end of June. The key export markets are the United Kingdom, United States (US) and Australia, which grew 24% in volume in the past year and represented 84% of New Zealand's international wine sales.
Current predictions are for exports to continue to grow from $250 million to nearly $736 million by 2006. However, a rising New Zealand dollar and increased competition from both New World and Old World producers in the premium end of the world market may increase downward price pressure on New Zealand's wine exports in the near future. The impact this will have on future returns is unknown, but will probably be greatest for brands without established and strong distribution links.
In response to this, a number of New Zealand wine companies have recently become linked to major foreign wine companies with global distribution networks. It is believed that nearly 80% of the New Zealand wine industry is now in "foreign hands", primarily Australian and US companies with major distribution outlets. This trend looks set to continue.
Record investment in the generic promotion of New Zealand wine of $2.5 million was recorded last year. Over 40 different events showcased New Zealand wine to an international audience of around 20,000 media, trade and consumers.
The merger of the two previous industry organisations into the organisation called New Zealand Winegrowers has been a success, and now represents 600+ grape growers and 400 winemakers on all issues concerning the New Zealand wine industry.
A complete revamp of all existing wine legislation is being processed through select committees and Parliament to form the new Wine Bill. The need to pass new legislation is seen as vital to the future of a rapidly growing industry. For example, the matter of addressing and complying with new European Union labelling requirements is seen as a vital issue to ensure continued access. Other parts of the Wine Bill are requiring more discussion by the industry. However, the setting, monitoring, compliance and enforcing of agreed wine quality standards, plus a more flexible system to ensure continued market access and a revised system for setting levies, are seen as the major benefits by the industry. The downside seen by the industry in the draft legislation to date is the cost of compliance and inflexibility, and this is being further addressed.
The recent and unexpected imposition of further excise tax on fortified wines has disappointed the wine industry, who are now suspicious of the Government agenda over wine excise, which may delay further progress of the Wine Bill.
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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