2025 - making it positive

Here’s hoping for lots of warm dry weather in coming weeks so that the industry once again delivers a vintage we can all be proud of. 2024 was a challenging year, with an export roller coaster, tourism back but not to pre-Covid 19 levels, costs on the up and up, falling demand for grapes for the upcoming vintage, and the global wine sector in general struggling in many markets. These trends confronted the industry head-on, impacting growers and wineries on a day-to-day basis, with the effects still being experienced as we begin 2025. However, there are developments that should help shape a more positive year ahead.

Our Reputation: The reputation of New Zealand wine, our people, and our regions continues to be very strong in our key markets. Our reputation is the foundation on which the success of the industry has been built and will be built in the future. Investing in that reputation – quality, distinctive, sustainable wines, made with care by innovative growers and wineries – will deliver long term dividends, helping the industry prosper in the face of the inevitable challenges that the future will bring.

Pinot Noir New Zealand 2025: It is six long years since a major intentional wine event was held in Aotearoa, so it will be great to start the year with Pinot Noir New Zealand 2025 in Christchurch, the first time the event will be held in the Garden City. New Zealand Winegrowers is supporting the event with a strong contingent of overseas guests, who will not only attend this celebration but other activities across the country. This is a great opportunity to showcase the very best of our wines, our people, and our regions to an audience keen to grow their Kiwi wine knowledge and share it in their home markets.

30 years of SWNZ: Another reason to celebrate – 2025 marks 30 years of Sustainable Winegrowing New Zealand (SWNZ), an anniversary well worth noting. Over the past three decades, SWNZ has become an integral part of the New Zealand wine landscape. From a small, vineyard focused trial programme, SWNZ has blossomed; it now certifies more than 96% of the vineyard area and the vast majority of the country’s wine production. It has evolved with the sector and the markets as they have changed over that time. Looking forward, SWNZ must continue to cost-effectively support and deliver credible sustainability credentials for growers and wineries.

Lower inflation: Rampant cost increases have been a major challenge since the inflation ‘genie got out of the bottle’ in the June 2021 quarter. For the three years from then to June 2024, inflation was consistently above the Reserve Bank’s target range of 1-3%. From June 2021 to December 2024, the total CPI change was 19%, and all the data indicate on-farm (vineyard) increases were more than that. These cost increases have been a huge burden on growers and wineries – they have eaten away at profitability, and undermined the confidence to invest in our brands, wineries and vineyards. So, it is very pleasing that inflation in New Zealand (and globally) seems to be back under control. The latest New Zealand CPI data showing a 2.2% increase in 2024 is positive; hopefully this will be reflected in lower interest rates, and a more buoyant economy in 2025.

Lower $NZ: With close to 90% of New Zealand wine sales in offshore markets, changes in the value of the $NZ have a big bearing on the income wineries generate from exports. The Trade Weighted Index (which measures the value of the New Zealand dollar against the currencies of major trading partners) slipped quite sharply in the final quarter of 2024, a real positive for exporters. Of course, there is a flipside to the lower currency – more expensive input costs for imports – but for the moment we will take the lower $NZ as a plus.

End to supply chain destocking: Destocking of supply chains (which had built up with all the supply uncertainty during Covid-19) was clearly one of the major issues impacting wine businesses in 2023 and 2024. For many markets it looks as though that destocking process has finished, but in the United States industry analysts still believe inventories remain a challenge, even though the situation has improved on what it was. Hopefully 2025 will see the end of this process.

Market Opportunities: From talking to wineries, and by looking at export and in-market sales data, it is clear there are still plenty of opportunities, in both traditional and non-traditional markets, for our wines. In the lead up to Christmas in the United Kingdom, for example, New Zealand white wines had the biggest share of the market, with sales up 7% by value for the period – that’s a really strong performance. In a similar vein, exports to China, one of our newer markets, are now at record level, with China Customs data showing the value of New Zealand wine imports up 18% in the past year. Again, that’s a really strong story.

Of course, 2025 will bring its own challenges, but there are positives out there as well. All the best for the year ahead and a successful 2025 vintage.