NZ wine grapples with oversupply despite export gains

"There's a lot of inventory sitting in wineries, and reduced demand for grapes out of the 2025 vintage."

But alongside news of unharvested grapes, struggling markets, surplus wines and a "highly uncertain" outlook for the global economy, he shone a light on New Zealand's wine exports having bucked the trend in the United Kingdom and United States, with modest sales growth in an otherwise flat or declining market, along with green shoots in new markets, including China.

The 2025 harvest figures are "signficantly" higher than 2024's light season, despite growers and wine companies leaving substantial amounts of crop in the vineyard. That comes in the wake of big crops in 2022 and 2023, with the latter released to market as supply chain destocking put the brakes on demand.

Philip said challenging wine market conditions continue, particularly in the UK and US, which together take 60% of New Zealand wine exports.

Meanwhile there's uncertainty around the US trade tariffs and increased regulatory pressure around alcohol and health. "And we now have more wine to sell over the next 12 months."

The result is hard times for growers, some of whom could not sell their grapes this year, Philip said.

"The dynamic between growers and wineries is changing a lot. Up until 18 months ago, wineries would take every grape that growers produced around the country. That's not the case anymore."

On the other side of the coin, global trends are towards the fresher, lighter wine styles, red and white, that New Zealand excels at, and exports for the past 12 months are up 5% on the 12 months to the end of April 2024, and about 20 million litres above the "low point" of January 2024, he said.

There has been good growth in non-traditional markets, and during the past year 70% of New Zealand wine export growth has been outside the UK, US and Australia.

"One of the markets that stands out in that is China," Philip said, reflecting on exports exceeding $50 million for the first time, with growth in Sauvignon Blanc demand proving "fantastic" for New Zealand wine.

Meanwhile, there are signs of recovery in key markets, with exports to the US up 2.9% in value and 2.3% in volume over the past 12 months, while white wine to the UK is up 8% in value and 9.5% in volume for that period. "They're really good numbers at a time that the markets are struggling."

The industry now has an opportunity to build on the "fundamentals" that have made New Zealand wine successful, Philip said. "A lot may have changed in the last five years, but what hasn't changed is our reputation around quality distinctive sustainable wine that's still in place and that's a huge positive for the industry to build on."