Hawke’s Bay backs Deloitte wine industry benchmarking survey

12th December 2011

Hawke’s Bay backs Deloitte’s wine industry benchmarking survey

Deloitte’s annual wine industry benchmarking survey is on the nail says Lyn Bevin, Executive Officer of Hawke’s Bay Winegrowers.

Lyn explains, “I would agree we are seeing a recovery, even if it’s slow to translate through to increased profitability to Hawke’s Bay wineries and growers. Looking into the recovery, Hawke’s Bay is positioning itself to make the most of improving conditions”.

In Hawkes Bay Winegrowers annual report, Chairman Nicholas Buck highlighted the region’s drive for quality as the reason behind increasing sales. Over the last five years Hawkes Bay wineries have reduced yields per hectare by 21%, improving ripeness and concentrating flavours. For the same period Hawkes Bay red wine exports have increased 48%.

But don’t expect our region’s wineries and growers to be throwing the cash around says Lyn. “There is a long way to go – most of our Hawke’s Bay wineries fall into the smaller categories of under $5million in total revenue and these wineries are barely gaining profitable returns. From the report bigger wineries are able to lower prices and combine bulk wine exports to their income mix. Smaller wineries also have proportionately higher administration costs to deal with and often owners don’t reimburse themselves at the rate of a commercial salary.”

She notes that like the Deloitte’s report Hawke’s Bay Winegrowers remains concerned about the management of bulk wine exports and has brought this to the attention of the national body, NZ Winegrowers several times this year.

Across all the wineries surveyed Deloitte’s reports that over 50% of case sales of branded wine are exported. “While we don’t have this sort of information for Hawke’s Bay this could also be true for the region, responded Lyn. “Having said that, Hawke’s Bay also has a significant number of very small wineries producing less than 5,000 cases per annum and they are more dependent on cellar door sales and wine tourism.”

The report also encourages collaboration between wineries in international markets. “We have been told this several times going back to the BCG (Boston Consulting Group) study in 2000, a Massachusetts Institute of Technology Entrepreneurship Center project in 2007 and the same message was delivered to regional wineries by Steve Green, NZWG Deputy Chair. Our Hawke’s Bay wineries aren’t competing against each other in the global market – we are too small for that. Instead the individual wineries must work together to gain critical marketing mass. We are a very diverse wine-making region, unlike any other in the world. What we have in common is Hawke’s Bay.”

According to the report exchange rates are the biggest issue across most wineries but the second biggest issue is marketing our wine overseas. Again, Nicholas Buck in his Chair’s Report agrees “Collaborative marketing is vital but can only be done in tandem with the industry’s own ability to fund activity. NZ Winegrowers have recently undergone a strategic review and we look forward to seeing what will be done to address these marketing concerns within the industry and management of bulk shipments.”

In summary, Lyn feels Hawke’s Bay Winegrowers is well positioned but adds “Only maintaining the premium brand image and red wine positioning of Hawke’s Bay through collaboration will get us there. This is the road to profitability for Hawke’s Bay wine in today’s global market.”

ENDS

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