Decline in wine consumption impacting NZ industry

15 November, 2018

While five million glasses of New Zealand wine are consumed around the world every day, consumption in some key markets is actually declining and the industry is starting to see the impact, says wine writer Michael Cooper.

Michael, who launches his 27th annual wine guide today (New Zealand Wines 2019: Michael Cooper’s Buyer’s Guide, published by Upstart Press), has noticed how trends in alcohol consumption are having a flow-on effect for Kiwi vineyards and wine exports.

“In the UK, a key export market for NZ wine, nearly 30 per cent of people aged 16 to 25 now avoid all alcoholic beverages, including wine,” says Michael. “The only age group which is drinking more wine is the oldest – those in the 65-plus category. There are clear signs of a similar pattern in New Zealand. I see many people in their 20s who either don’t drink at all or only very occasionally.”

In 2009, Kiwis consumed an average of 21.5 litres of wine per year, but our typical consumption has now eased to 19.2 litres per head (this includes imports which are very popular in the sub-$10 category). The fall in our consumption of New Zealand wine is even steeper – from 13.9 litres per capita in 2009 to only 10.9 litres per capita in 2018 – a drop exceeding 20 per cent.

Wine is now this country’s fifth most valuable export commodity and is on track to generate $2 billion per year in export receipts by 2020, fuelled largely by American demand for our Sauvignon Blanc. But over the past decade, the average value of those exports has fallen from $NZ8.85 per litre in 2009 to $NZ6.68 per litre in 2018.

In recent months, two wineries have been placed in receivership, Vinoptima in Gisborne and Mahana, one of Nelson’s largest producers. Michael believes there will be more to come.

“Many small wineries were established during the 1990s by affluent ‘baby boomers’, then aged in their 40s. Now they are in their mid-late 60s and keen to sell up,” he says. “The number of wineries in New Zealand peaked six years ago and the industry is facing more and more consolidation. Some of these small wine companies simply close down; others are acquired by the biggest companies, which are often overseas-owned.”

The enforcement of drink-driving laws has encouraged a more moderate consumption of alcoholic beverages, including wine, in New Zealand.

Rabobank suggested recently that the legalisation of marijuana in North America may also pose a threat to winegrowers, with some wine consumers expected to view marijuana as a “substitute”.

Of course, Michael’s wine consumption has definitely not declined. In the last year he’s tasted around 3,000 New Zealand wines in order to write his long-standing guide. To get through that volume he’s required to sample about eight wines a day - an acquaintance told him recently that he has “the best job on earth”.

So it’s no surprise Michael really knows what he’s talking about when it comes to both NZ wine and the state of the industry.

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