NZ wine: full bodied and aging well

Marisco Vineyards is pushing the boundaries with their new generation winery in Blenheim at the heart of New Zealand’s Marlborough wine region.

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It’s not their geography, their grape varieties or even their winemaking. It’s their technology. According to winemaker and proprietor Brent Marris, these days you can’t afford not to be a tech head.

"We are increasingly seeing businesses investing in technology and innovation which is leading to better business decisions.”  - Bennett

“The investment in technology and innovation is a big step up for us but we don’t see it as a cost,” he told bluenotes.  “It is all about the future.”

That attitude represents the kind of innovation which has helped drive the performance of New Zealand wine.

The wine industry continues to perform well on the back of profitability for wineries of all sizes, strengthening balance sheets and a healthy propensity for innovation.

The 2018 Wine Industry Benchmarking and Insights survey report, Growing Smarter, released by Deloitte and ANZ in conjunction with New Zealand Winegrowers, tracks the financial results of 36 survey participants accounting for 44 per cent of the industry by litres of wine produced, and 35 per cent by export sales revenue generated.

Deloitte partner Peter Felstead said the 2018 results show all categories of participants recording positive profits before tax for only the third time in the twelve year history of the survey (2014, 2016 and 2018). 

“In line with previous years’ results, larger wine companies with more than $NZ20 million in revenue show the largest average profit after tax of 18.7 per cent of revenue, with smaller wineries generally achieving lower returns and with greater variability amongst respondents,” Felstead says. 

“It has also been pleasing to see equity levels, as a percentage of total assets for the wider survey group, have been steadily increasing over the last 10 years with levels ranging from 54 percent to 72 percent.”

Investing in innovation

ANZ NZ General Manager for Commercial & Agri John Bennett says this year’s survey highlights the importance of innovation in the industry.

“The survey results indicate a positive correlation between innovation and the financial performance of wine companies,” says Bennett. “We are increasingly seeing businesses investing in technology and innovation which is leading to better business decisions. “

“This is particularly relevant when it comes to environmental changes, managing staffing pressures and improving customer experiences.”

Investing in technological advancements in plant and equipment was identified as important to 94 per cent of respondents.

At Marisco, Marris says it helps having a new generation of winemakers in the business:  “We need those millennials who understand more about technology than I do.”

Daughter and production wine maker Emma Marris is helping drive the changes. “What I am involved with more and more is capturing the state of the art technology out there and looking at how we can bring that into our new winery,” she says.

According to the Growing Smarter survey, wine companies are adopting digital tools to improve customer and staff experience and engagement, and to drive improved business decision making. Larger wineries are leading with a broader range of digital tools, including more sophisticated Internet of Things (IoT) solutions.

At the other end of the spectrum, many smaller wine companies are leveraging technology to connect and engage with their customers to maintain competiveness in a tight market. 

Positive pricing

The report shows 2018 saw a 1.8 per cent lift in average prices received by New Zealand wineries after sales outstripped supply during 2017. 

Prices per litre ranged from $NZ3.96 per litre for bulk export wine, $NZ8.47 per litre for packaged exports and $NZ10.34 per litre for supply into the domestic market.

In terms of New Zealand’s wine exports, 80 per cent is bought by just three markets – the United States, United Kingdom and Australia.

However, the price for New Zealand wine exported to the Asian markets of China, Hong Kong, Singapore and Japan is twice the average export price. These Asian markets account for just 2.5 per cent of New Zealand’s wine exports indicating significant growth potential. 

Furthermore with reduced tariffs brought about by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canada (already New Zealand’s fourth largest export market) and Japan (the tenth largest) are shaping up as top candidates for growth opportunities.

Briar McCormack is New Zealand editor for bluenotes

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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