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Impact of wine exports
1. Impact of Wine Exports
on a Region
focusing on major wine export regions of New Zealand.
Sam Shields
2. • New Zealand is home to roughly 700 wineries with vineyards
occupying around 35,000 hectares. (New Zealand Institute of
Economic Research, 2014)
• The industry is very well known globally for it’s world class Central
Otago Pinot Noir as well as Marlborough Sauvignon Blanc
• New Zealand wines are know for their vibrancy, intensity, and distinct
purity, which is achieved through a cool Autumn allowing a
lengthened ripening period.
Snapshot of New Zealand’s Wine Industry
3. • Exports is the notion of sending a product or item to another country or
market. It allows foreign currency to flow into the exporting organisation,
and therefore the country
• The flow of exports directly impacts a country’s Gross Domestic Product
(GDP). GDP is essentially the economic health of a country on the whole
• Exports increases the number of jobs, wages, tourism, and many more.
(Pettinger, 2013).
Exports and its importance to an Economy
4. • Wine Exports rose 10% in 2014 to $1.33 billion
• The average price of bottled wine saw $8.32/L and bulk white wine saw a
price of $4.00/L. Both increased slightly from the previous year
• New Zealand’s wine exports are dominated by Sauvignon Blanc, making up
85% of the total exports. The remaining 15% are made up of other varietals
(New Zealand Institute of Economic Research, 2014)
(NZ HERALD, 2014).
New Zealand’s Wine Exports Stats
5. Why a winery may choose to Export
• As with any business, exports help to achieve sustainable business
success through sales
• Recognition of their product on the world stage increases demand
allowing for many flow on benefits. It also acts as a check on future
production, to ensure quality is maintained
• Ultimately, exports give a winery freedom to grow and innovate
(Pettinger, 2013).
6. Impact on the Region
• The New Zealand wine industry is dominated in a
few major regions
- Marlborough
- Hawke’s Bay
- Central Otago
• The noticeable effects for these areas include
jobs, tourism, investment, and increases
to local GDP. (NZIER, 2009).
7. • Located at the top of the New Zealand’s South Island
and is the largest wine producing area
• Makes up 70% of New Zealand’s wine plantings
• Extremely well known for Sauvignon Blanc and
accounts for $1 billion of New Zealand’s wine exports.
Marlborough
8. • New Zealand’s second largest wine producing region
• Located on the East coast of the North Island
• Well known for Bordeaux blends, Syrah, and Chardonnay
(Dustow & Nana, 2010).
Hawke’s Bay
9. Central Otago
• Arguably the most attractive and fashionable of
New Zealand’s wine regions
• Located at the bottom of the South Island
• Central Otago is very well know for a fruity, aromatic
Pinot Noir
• A long cool Autumn allows for a slow ripening period,
producing very aromatic, full flavour Pinot Noir.
10. Benefits for Wineries and Region
• Winery/Vineyard Investment
• Through export generated tourism, wineries become happy to invest in land and
infrastructure. This ensures aesthetically pleasing facilities, and promotes further
tourism. It will also mean increased yield in following years
(NZIER, 2009).
• Wine Tourism
• Particularly evident in the three major wine regions. Visitors from over the country,
and over the world visiting to see the region and wineries
• Creates jobs for hospitality and tourism operators.
11. • Community business growth
• Businesses who service the wine industry such as bottling plants, freight
forwarders, and farming all feel positive effects of a demanding wine export
industry
• Local Government can leverage the success of their local businesses.
• Marlborough is a fantastic example. A region that is synonymous with
Sauvignon Blanc
• Premium wine glass producer Reidel has produced a wine glass specifically for
Central Otago Pinot Noir (MCKENZIE-MCLEAN, 2015).
More Benefits for Wineries and Region
12. Cont: Benefits for Wineries and Region
• Job within Wineries/Vineyards
• Export income allows wineries to hire the very best staff, and
invest for the future
• Education
• Education providers in the region experience increase in signups
particularly in wine related courses. Hawke’s Bay is a great
example with the Eastern Institute of Technology (EIT) offering a
range of Bachelor, Diploma, and certificate courses (NZIER, 2009)
• Overall we can see many benefits for regions. It is important for them
to embrace the wine industry to continue to reap the rewards.
13. • We know that New Zealand’s wine industry exports $1.33 billion
worth of wine or 2% of GDP (NZIER, 2009)
• Sauvignon Blanc makes up 85% of wine exports with 15% made up of
other varietals
• New Zealand is well regarded as a premium wine producer, with
fragrant and flavour-rich wines. This is a product of a long cool
Autumn, which allows for slow ripening.
Conclusion
14. • Through exports we see evidence of job creation across the board
• Vineyards/wineries are able to invest in infrastructure, land, and
industry development in their region
• Increases in wine tourism in the region
• Education providers becoming larger and service more industry
specific fields
• Councils are able to leverage success of the industry, and use as a
marketing campaign for the region.
Conclusion
15. Bibliography
• Dustow, K., & Nana, D. (2010). 2010 Regional Profile for Hawke's Bay. Wellington: Berl Economics. Retrieved from
http://www.berl.co.nz/assets/Economic-Insights/Economic-Development/Regions/RegionalProfileforHawkesBayRegionalCouncil-
1.pdf
• MCKENZIE-MCLEAN, J. (2015, March). Riedel Crystal makes 'perfect glass' for Central Otago Pinot Noir. (Stuff, Ed.) Retrieved from
http://www.stuff.co.nz/life-style/food-wine/drinks/67511315/Riedel-Crystal-makes-perfect-glass-for-Central-Otago-Pinot-Noir
• New Zealand Institute of Economic Research. (2014). The economic contribution of the New Zealand wine sector. Wellington. Retrieved from
http://www.nzwine.com/assets/sm/upload/82/kf/wf/o7/The%20economic%20contribution%20of%20the%20New%20Zealand%2
0wine%20sector%20-%20final%20report%20%20%20%20.pdf
• NZ HERALD. (2014, January 22). Huge boost for wine industry. (R. Moroney, Ed.) Hawkes Bay, New Zealand. Retrieved from NZ Herald:
http://www.nzherald.co.nz/hawkes-bay-today/business/news/article.cfm?c_id=1503458&objectid=11190393
• NZ Wine. (2013). New Zealand Wine Growers Annual Report 2014. New Zealand Wine Growers. Retrieved from
http://www.nzwine.com/assets/sm/upload/b5/2j/rr/2n/NZW%20AR%202014_web.pdf
• NZ Wine. (2014). Hawkes Bay Regional Information. Retrieved from New Zealand Wine: http://www.nzwine.com/regions/hawkes-bay/
• NZIER. (2009). Economic impact of the New Zealand wine industry.
• NZWine. (2013). NZ Wine Annual Report. Auckland, New Zealand: NZ WINE. Retrieved from
http://www.nzwine.com/assets/sm/upload/da/9i/te/eu/NZW_Annual_Report_2013_web.pdf
• Pettinger, T. (2013, March 31). Importance of exports to the economy. United Kingdom. Retrieved from
http://www.economicshelp.org/blog/7164/trade/importance-of-exports-to-the-economy/
New Zealand’s wine industry is made up of roughly 700 wineries nationwide, with vineyards covering an area of about 35,000 hectares (350 million square meters).
It is a result of a premium reputation and a drive for quality which is why New Zealand's wine industry has such a well known and large demand world wide.
One of the reasons New Zealand is able to charge a premium for their wine is because of their Clean Green image and efforts in sustainable practices as a nation. If this is lost, the wine industry along with many other export markets will suffer.
New Zealand wines are known for their vibrancy, intensity and distinctive purity. Characters which are heightened through a lengthened ripening period as a result their cool Autumn. The cool temperatures allow the grapes to ripen and develop in flavour.
Vineyards are located in all areas of the country, with Central Otago, Marlborough, and Hawke’s Bay being the most well known producers with the best climates for growing grapes.
This strong reputation and quality product enables wineries to export their wines globally. The effects of exports can be seen in both the wineries and their respective regions.
Exporting is the notion of sending a product or item to another country or market.
A buyer and seller will agree on a price for the products, in this case wine, and there will be an exchange as a result.
Exports serve as a very important part of any country's economy, as this directly effects its gross domestic product (GDP). This is derived through the flow of money through businesses and money spent throughout a country.
The positive effects which are visible as a result of exports are an increased number of jobs, increased wages, increases in tourism, and many other positives which flow through to the local regions.
In 2014 the value of New Zealand wine exports increased 10% to $1.33 billion.
The average export price of bottled wine saw $8.32/L and bulk white wine exports saw $4.00/L.
New Zealand’s wine exports are predominantly Sauvignon Blanc making up 85% of exports in 2014, with the remaining 15% made up of other varieties.
A winery’s main goal is to produce a quality, complex, and flavour-rich wine. Arguably, their second goal is to have that wine touch as many mouths as they can, and this can only come as a result of sales.
As climate can vary across New Zealand, this can give a large variance on yield for any given vintage.
It is through exports that a winery can ultimately access a far greater market for their product, which can result in increases in sale, and profits, with a greater consistency.
Wine exports provides a winery with resources which enhances its business sustainability, growth, and innovation.
It is through wine exporting that wineries attempt to achieve sustainable business success. Their ability to produce a product which is recognised as being of the highest quality, that allows them to attract overseas demand.
A winery will experience many benefits through exporting their product, with only a few negative outcomes, if any. The positive flow through effects for their respective regions, in most cases, is very significant.
Wineries with heavy wine exports have a large impact on the regions they are located. For New Zealand, the wine industry is more or less populated in only a few regions. This comes down to soil composition and climate.
Benefits experienced on a regional scale can be broken down into three main categories: Direct, Indirect, and Induced. This opens out to explain where benefits can be experienced for a community. The effect of wine exports can include jobs, tourism, GDP, and investments, which are just some of the categories that help a region to flourish in the wake of international trade.
To broadly identify the extent of the benefits that are experienced as a result of wine exports regionally, it makes sense to concentrate on the major three regions.
Perhaps through the luck of the perfect climate, but also some well thought out Viticulture, these regions have become synonymous with the NZ wine industry. Local Government can now market themselves in line with the success of the wine industry in their regions.
This could be in many ways compared to the French concept of terroir. That being that these regions have cemented their notoriety for particular wines, combined with consistent quality, and characteristics loved by an international market. The grapes are chosen carefully for particular soil composition, in a particular climate. A long cool season allows the grapes to ripen slowly, therefore creating a much more intensified flavour, and aromas.
Marlborough - The largest wine region in New Zealand located at the top of the South Island. Well know for its Sauvginon blanc. The region makes up close to 70% of New Zealand’s wine plantings. Export value $1 billion.
Hawke’s Bay - This is the second largest and oldest producing wine region in New Zealand, located on the East coast of the North Island. Known for stunning Bordeaux blends, Syrah, Chardonnay, and Sauvignon blanc.
Central Otago - Located deep in the South Island of New Zealand. Largely known globally for its Pinot Noirs. Soil in this region is very stony/rocky, making it perfect for Pinot Noir.
Sales - A winery has the ability to multiply their annual sales by accessing overseas markets. Through increases in sales, this allows for a healthy cashflow.
Investments - With a sustainable cash flow, the business may choose to reinvest. This can include expanding operations, investments in infrastructure, machinery, or land. These all contribute to better and smarter business.
There are a number of businesses who supply directly to wineries and vineyards. Income received from exports means increased expenditure for day-to-day operations. Local businesses such as freight forwarders, farming supplies, and bottling operations feel the positive effects.
Exporting relies on the shipment of good. With large export quantities, this creates business for the local freight companies. In Marlborough alone there are several: DCB International, Courier Post, Castle Parcels, Fliway, Mainfreight, Daily Freight, Toll Tranz Link, and G & L Taylor to name a few.
Exports drive growth. With this we see jobs within the direct source of exports (wineries & vineyards) increase significantly. It allows wineries to focus on quality staff and retaining their best. For business sustainability this benefits the vineyards, the winery and region as a whole.
The business of wine is fairly specific. With a large amount of exports taking place, this attracts attention towards wine making and wine marketing. Education providers tend to offer courses in response to demand. For example, Eastern Institute of Technology in Hawke’s Bay is very well known for offering a large range of Viticulture and Oenology courses, attracting students from all over the world, this provides great benefits to Hawke’s Bay.
The wine industry is fantastic for New Zealand, whose wines are being noticed as some of the best in the world.
Snapshot of New Zealand Wine Industry
Export value 2014- $1.33 billion
Exports make up 2% of GDP
Sauvignon Blanc varietal making up 85% of exports
Major regions: Marlborough, Hawke’s Bay, Central Otago.
Benefits of wine exports for regions
Through exports we see evidence of job creation across the board.
Vineyards/wineries are able to invest in infrastructure, land, and industry development in their region.
Increases in wine tourism in the region.
Education providers becoming larger and service more industry specific fields.
Councils are able to leverage success of the industry, and use as a marketing campaign for the region.
Dustow, K., & Nana, D. (2010). 2010 Regional Profile for Hawke's Bay. Wellington: Berl Economics. Retrieved from http://www.berl.co.nz/assets/Economic-Insights/Economic-Development/Regions/RegionalProfileforHawkesBayRegionalCouncil-1.pdf
MCKENZIE-MCLEAN, J. (2015, March). Riedel Crystal makes 'perfect glass' for Central Otago Pinot Noir. (Stuff, Ed.) Retrieved from http://www.stuff.co.nz/life-style/food-wine/drinks/67511315/Riedel-Crystal-makes-perfect-glass-for-Central-Otago-Pinot-Noir
New Zealand Institute of Economic Research. (2014). The economic contribution of the New Zealand wine sector. Wellington. Retrieved from http://www.nzwine.com/assets/sm/upload/82/kf/wf/o7/The%20economic%20contribution%20of%20the%20New%20Zealand%20wine%20sector%20-%20final%20report%20%20%20%20.pdf
NZ HERALD. (2014, January 22). Huge boost for wine industry. (R. Moroney, Ed.) Hawkes Bay, New Zealand. Retrieved from NZ Herald: http://www.nzherald.co.nz/hawkes-bay-today/business/news/article.cfm?c_id=1503458&objectid=11190393
NZ Wine. (2013). New Zealand Wine Growers Annual Report 2014. New Zealand Wine Growers. Retrieved from http://www.nzwine.com/assets/sm/upload/b5/2j/rr/2n/NZW%20AR%202014_web.pdf
NZ Wine. (2014). Hawkes Bay Regional Information. Retrieved from New Zealand Wine: http://www.nzwine.com/regions/hawkes-bay/
NZIER. (2009). Economic impact of the New Zealand wine industry.
NZWine. (2013). NZ Wine Annual Report. Auckland, New Zealand: NZ WINE. Retrieved from http://www.nzwine.com/assets/sm/upload/da/9i/te/eu/NZW_Annual_Report_2013_web.pdf
Pettinger, T. (2013, March 31). Importance of exports to the economy. United Kingdom. Retrieved from http://www.economicshelp.org/blog/7164/trade/importance-of-exports-to-the-economy/
