It was a year of highs and lows, and anything but normal. For the record, here are some of the key themes and numbers from the past 12 months:
Covid-19: The introduction of the Omicron strain impacted us throughout the year, with confirmed number of cases in New Zealand (at time of writing) at 1.894 million. Thankfully, the impact in markets has declined in most countries, but China still appears to be moving from one lockdown to another.
Ukraine War:An atrocity that most of us could not comprehend, the war erupted in February and has featured in the news every day since. The New Zealand government has sanctioned Russia, with New Zealand wine now a prohibited export to Russia, cutting off a market estimated to be worth close to $50m a year.
GDP growth: In New Zealand (for the 12 months to June) it is just 1.7%, while the latest US data is stronger at 2.6%. The economic outlook for 2023 is very mixed, with economists gloomy about the prospects for many economies.
Inflation: Returned with a vengeance, and to levels not seen for a generation. In New Zealand the current rate is 7.2% (12 months to September), while in the USA it is 7.7% and in the UK 10.1%. This is creating increased uncertainty for exporting wineries, most of which will not have exported during a time of high inflation.
Excise: The increased inflation rate is directly impacting wineries through indexation of excise. Paralleling the jump in CPI, on 1 July excise rates lifted by just under 22c per litre or $1.94 per case. This lifted excise to $3.32 per litre, and took the estimated excise take on wine in the year ahead to $300m. The excise per hectare varies according to yield but can easily reach over $25,000 per hectare. Worryingly, the inflation outlook suggests there is another significant increase on the way, come 1 July 2023.
A better vintage: After a small crop in 2021 and with stocks at record low levels, growers and wineries were keenly looking forward to a larger harvest in 2022. Thankfully, nature delivered 532,000 tonnes, well up on the previous year.
Grape prices: Responded to the strong demand from wineries and jumped 11% to just over $2,250 per tonne.
Labour challenges: With the border closed for a significant part of the year, the shortage of labour was a major concern, forcing many businesses to re-think how they resourced these time-critical tasks. Labour supply costs escalated, and pruning took longer than ever in many regions. Positively, the cap on the number of RSE workers who could come into the country in the year ahead was lifted to 19,000.
Our people: 2022 was marked by very strong participation in events such as Young Winemaker and Young Viticulturist of the Year. According to a Diversity Works Survey 57% of our people have worked in the industry for 10 years or more. Less positively, the gender pay gap in the industry was revealed to be 7.8%, an area that needs attention for all industry businesses if we are to be an industry of choice for employees.
Export value: Average value of exports are up strongly compared to last year. Average value of packaged exports is up 7% on a year ago (12 months to September), while unpackaged exports are up 11% for the same period. Together the increased volume and higher prices, have lifted total export value to $2.02 billion (12 months to September) up more than $100m on a year ago. Continued strong export growth is forecast for coming months.
Exports volume rebound: While export volumes fell steadily following the small vintage in 2021, they have now started to rebound with increased volumes available from vintage 2022. Export volume for the July – October period is up 12% compared with last year.
New Zealand reopened to the world: With the easing of New Zealand’s strict border controls, many in the industry are keenly awaiting the return of international wine tourists, with nzwine.com listing more than 250 wineries offering wine tourism experiences. In 2019, 23% of international visitors visited a wine tourism experience, and on average, these tourists spent 27% more, stayed 3.5 days longer in New Zealand, and visited more regions.
Our wine on the world stage: Events are once again being planned in our key international markets, with the third New Zealand Wine Week running from 30 January to 7 February 2023. The tradefocused activation and events will take place in the US, Canada and the UK, as well as Australia. And the New Zealand wine stand will once again fly our flag proudly at the world’s leading wine trade show, ProWein, in March 2023. Visitor numbers were at 61,500 at the last show pre-pandemic in March 2019. The target for the coming event is 80% of the 2019 visitor number.
Sustainability commitment: Last but definitely not least, and despite all the ups and downs of the past year, the commitment of the industry to sustainability is undiminished, with 96% of the vineyard area and 310 wineries SWNZ certified, while 10% of New Zealand wineries hold organic certification.
Very best wishes for the holiday season as we look forward to 2023.
