New Zealand’s wine industry may be small by global standards, but it contributes generously to New Zealand’s export drive – even during the headwinds of a global pandemic.
2020 will go down as a year of uncertainty across all market sectors. While the worst of Covid-19 may be behind us, its lasting impact on business revenues will linger for a long time.
New Zealand’s wine industry is worth almost $2 billion in exports, and currently ranks at number six in our export sector returns. When NZBusiness spoke to Philip Gregan, CEO of New Zealand Winegrowers in early June, he said there was an increase in exports in both March and April, followed by a subsequent flattening in export numbers.
“In terms of impact on sales, currently we are seeing two situations happening in markets,” he says. “While there has been strong demand for New Zealand wine in supermarkets and online retail, which has benefited our industry, on the other hand many wineries focused on hospitality and cellar door sales have been negatively impacted.
“The challenge will be when borders reopen and how long it is until we are able to physically get back into the market – as this is where the personal contacts are very important, particularly for small and medium sized businesses.
“As an industry we were acutely aware that we were in an incredibly privileged position to be allowed to pick the grapes, and throughout the entire lockdown our number one priority was the safety of our people and our communities. The fact that more than 400,000 tonnes of grapes were harvested, and no Covid-19 clusters developed within our communities, testifies to how our industry fully embraced the challenges to work safely during harvest.”
Gregan says they’ve heard countless industry stories of winegrowers overcoming adverse and stressful conditions to complete what was a stellar vintage. Some members had to let staff go during the lockdown harvest in order to comply with strict regulations.
“Instead they had to complete the whole harvest with a skeleton crew of family members and close friends.”
With New Zealand’s major export markets going into lockdown, international borders closed, and no gatherings permitted, New Zealand Winegrower’s international promotional events and education activities had to be postponed or cancelled.
“We quickly moved into virtual execution,” says Gregan, “creating digital initiatives to connect with the trade such as ‘speed dating’ with buyers, and expert panel discussions – as well as connecting with consumers via podcasts, livestreams and webinars.”
Social media has been a vital tool too, he says, and a successful campaign celebrating International Sauvignon Blanc Day was recently conducted across the major social channels.
Market experimentation
In China, where Internet penetration is the highest in the world, and digital innovation is everywhere, New Zealand Winegrowers has been able to experiment with some novel approaches.
“With wine trade shows not possible we created a ‘national pavilion’ on the newly created online Lookvin Expo, with strong interest from New Zealand wineries to take part,” says Gregan.
“Also with the move towards live-streaming, and real-time interactive video content booming, we moved quickly to join the trend – hosting online live-streaming courses with influential Chinese wine media that had a combined reach of 19,500-plus wine lovers and increased traffic to the New Zealand Wine e-commerce platforms on Tmall and JD.com.”
This article was first published in the August 2020 edition of NZBusiness magazine.
Blessed, but cautious
As chair of Wine Marlborough[1] and GM of Framingham, a vineyard dating back to 1981, Tom Trolove has a good handle on how wine sales have been tracking, both here and overseas, during the Covid crisis.
It’s been a bit of a rollercoaster, he reports, with New Zealand’s overall wine exports slightly up in April and slightly down in May – although May also generated increased sales for dependable varieties such as the classic premium sauvignon blancs.
Sales figures directly correlate to how much on-premise wine is sold into the likes of bars and restaurants, Trolove explains. As of June in the UK, for example, there had been virtually no restaurant sales for three months.
However, where importers have good relationships with wine retailers, he says sales have been healthy, particularly in markets such as Australia, the UK, US and Canada.
For individual Marlborough wineries, the impact of Covid-19 has been inescapable. Trolove says in Framingham’s case, overall volume is down around 20 percent on the previous calendar year, and looking ahead they’re having to change the way they approach markets.
“Retailers are very important for us, and we’re trying to support them as much as possible by putting some attractive deals on the table.”
As overseas restaurants get back up to speed, there will be an order backlog to address, and that has already been the case in New Zealand, he says.
The United States is Framingham’s biggest export market, and because their brand is more exposed to the retail sector, sales have held up well there during the Covid crisis.
Trolove (pictured below) has seen overseas research comparing ‘Old World’ wine sales with ‘New World’ wines, and is encouraged by the fact that New World wines, such as New Zealand’s, have performed better during the pandemic. “Marlborough sauvignon blanc has been a particular favourite of people during lockdown,” he says, describing it as a “comfort brand”.
While it is still early days in the Covid recovery, and there is a global financial crisis predicted to follow the pandemic, Trolove has nevertheless been heartened by the relative stability of New Zealand’s wine export industry in these unprecedented times, and he believes the quality of the 2020 vintage will aid its full recovery.
“Being able to harvest through Covid was an absolute life-saver for the industry,” he says. “It was such a critical, and often chaotic, two-month period for everyone.”
“At the moment, as an industry, we feel somewhat blessed – but there’s a general cautiousness out there regarding the future.”
Framingham has re-opened its cellar door and the support from locals has been great, says Trolove. The wage subsidy scheme meant they could retain their staff and refocus efforts on telemarketing and e-commerce – “which proved to be an absolute lifeline”.
He’s also grateful for the government’s Recognised Seasonal Employer (RSE) scheme which allows vineyards to get through the busy pruning season and provide work for locals.
[1] Wine Marlborough represents 500+ grape growers and more than 100 wineries.
