Impact of Wine Exports

on a Region focusing on major wine export regions of New Zealand.

Sam Shields

• 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

• 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

• 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

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).

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).

• 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

• 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

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.

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.

• 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

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.

• 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

• 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

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/

End.