Key Export Market Update – A Conversation with NZW’s International Team

This session was held on 12 September, 2023. A full recording and the webinar presentation are available below.

An update on the Top 4 export markets for New Zealand wine. Our international team will present the current state of their respective markets including NZ wine performance, and the challenges (“head winds”) and opportunities (“tail winds”) they see for New Zealand wine in 2023/24.

Chaired by Charlotte Read, General Manager of Brand NZ Wine, this Export Market webinar will consist of four 15 minute presentations from our International Market Managers responsible for the US, UK, Australian and Canadian markets. These four markets represent 85% of New Zealand’s wine export volume.

This webinar offers a time efficient opportunity to join our international markets team “live” in one global virtual forum. They are your “24/7 eyes and ears” in-market therefore who better to share valuable insights and intel on NZ Wine and answer any market specific questions that you might have.

Be advised that China will be covered in a separate webinar held towards the end of the year.

Summary of the Webinar

USA

Overview

  • Number one export market with 34% share of export volume (+9pp vs 2013), MAT +12% growth *1
  • Number one on 10-year growth, 2013-2023 CAGR +9.4% *2
  • New Zealand ranked based on wine imports by value April 2023 *3
  • Sauvignon Blanc is the only top five varietal in growth, ranked fifth (+1.5% vs. YA), Pinot Noir ranked sixth (-3.8% vs. YA) *4
  • Over $15 table wine performing well on two-year stack *5
  • Evolving wine trends
    • The strongest wine segment is now $15 - $25
      • Above $15 was up 4.4% last year by volume *6
    • $15 and below are continuing to see a downward trend.
    • Sparkling wine, driven by Prosecco, is on the rise.
    • RTD's are still hot.
    • Alternative packaging continues to see gains.
    • The "Better for you" category is big and growing
    • Provi has seen an increase of 20% in sustainable wine sales
      • +17.5% in organics and +16% in biodynamics *7
    • 10% of bottles of imported wine in the USA were from New Zealand!
    • Out of the top 20 selling imported table wine brands in the USA in 2022 - New Zealand has four brands, with two in the top 10 (ranked fifth and seventh)! *8

 

Headwinds – Key Issues

  • Wine skewed to the ageing population
  • Lower pick up amongst younger consumers
    • 35% are non-adopters vs only 14% 70+ *9
  • Cross category competition
    • Only 7% of households exclusively shop for wine vs. 38% of households shopping for Beers, Wines, and Spirits *9
  • Compressed Market Growth
  • Economic Conditions

 

Tailwinds – Key Opportunities

  • Premiumization – drinking less but better
  • $15 to $25 remains a sweet spot
  • Sauvignon Blanc remains in demand
  • Pinot Noir, Chardonnay and Syrah
  • Demand for: Better for You products, Sustainability, Organics
  • Gen Z Consumers
Sources: *1 NZW Export Report August 2023; *2 NZW Export Reports June YE, 2013-2023; *3 Gomberg Fredrikson, Import/Export Report, April 2023; *4 SipSource 9/2022; *5 SipSource MAT May 2023; *6 Wine Market Council; *7 Provi; *8 Impact Databank 2022 *9 Wine Market Council

UK

Overview

  • Number two export market with 24% share of export volume, MAT +12% growth *1
  • 2013-2023 CAGR +5.0% *2
  • New Zealand is sixth by Value of total still wine with 8.4% share *3
    • Value growth +2.8%
    • New Zealand's average price is £8.17
      • 26% premium vs. market price of £6.47
    • 93% of New Zealand wine is white wine led by Sauvignon Blanc
      • Sauvignon Blanc is 87% of the total New Zealand Wine value
      • New Zealand Sauvignon Blanc has a 46% share of the total Sauvignon Blanc market
      • New Zealand Sauvignon Blanc has a 7.3% share of total wine

 

Latest MAT

  • Market +3.1% price increase, -2.9% volume decline average price per 750cl £6.47
  • New Zealand +2.8% value, minimal price increase, +2.6% volume growth

 

Latest 6-weeks

  • Market +5.3% price increase -1.5% volume decline, +3.8% value growth
  • New Zealand wine +5.6% value, +2.7% volume ahead of market +3.8% value, and -1.5% volume

 

Latest 12 weeks

  • New Zealand white share +0.6pp, rate of dollar sale +12%
  • All other shares declined, except Italy +0.2pp

 

Headwinds – Key Issues

  • UK Duty Increase
  • Uncertainty in the UK – energy costs / Brexit / strikes etc.
  • Supply chain issues (glass costs etc.)
  • Cost of living (but + drink less but better)
  • Cheap sauvignon from other countries (imitation)

 

Tailwinds – Key Opportunities

  • Quality lighter wines
  • Sustainable strong – including Organic / Biodynamic UK FTA
  • Other white varieties and Rosé
  • Alternate Packaging
  • E-Commerce
Sources: *1 NZW Export Report August 2023; *2 NZW Export Reports June YE, 2013-2023; *3 NIQ UK w/e 26/08/23

Australia

Overview

  • Number three export market with 22% share of export volume, MAT +19% growth *1
  • 2013-2023 CAGR +3.1% *2
  • Wine sales by country of origin/ share by value *3
    • Total wine declined -0.6%
    • Top four countries = 98% value
      • First, Australia 75.4% share, growth +0.1%, share gain
      • Second, New Zealand's 11.8% share, declined -1.1%, share decline
      • Third, France 9.3% share, declined -7.7%, share decline
      • Fourth, Italy 1.7%, growth +1.7%, share gain
  • Ranked third export market for Sauvignon Blanc but first for
    • Chardonnay
    • Pinot Gris
    • Riesling
    • Sparkling
    • Pinot Noir
  • Total Australian Off-Premise liquor -1.0% value and -6.5% volume *3
  • Eastern seaboard = 76% value and 75% volume *3
  • All Liquor categories are in decline except RTDs +3.4% *3
    • Wine -0.6% value and -1.7% volume
    • New Zealand wine -1.1% value and -2.5% volume
    • New Zealand wine share 11.8% value (-0.1pp) and 9.6% volume (-0.1pp)

 

Gainers and Drainers *3

  • Prosecco is the number one Gainer
  • White Champagne is the number one Drainer
  • Strong growth in Rosé, Pinot Gris/Grigio, Chardonnay & Sangiovese
  • Strong New Zealand growth story in Top Gainers Rosé, Chardonnay and Pinot Grigio
    • 21% share of Rosé growth vs. 17% category share
    • 17% share of Chardonnay growth vs. 8% category share
    • 13% Labelled Pinot Grigio growth vs. 4% category share
  • New Zealand Sauvignon Blanc, Pinot Noir, and labeled Pinot Gris under-performed versus category
    • New Zealand Sauvignon Blanc -1.9% value vs. category +0.7%
    • New Zealand Pinot Noir -9.5% vs category +3.1%
    • New Zealand Labelled Pinot Gris -2.2% vs. category +4.8%

 

Headwinds

  • Oversupply
    • Australia has the equivalent of 859 Olympic swimming pools worth of wine in storage
  • Cost of living
    • Housing, food, fuel – it's all up
  • Inflation
    • Considerable pressure on Australians' discretionary spending
  • Localism/ Australia/ state/ region
    • "Our own backyard"
      • Sydney is an exception, more international wines

 

Tailwinds

  • Growing the premium end of the market
    • including Sauvignon Blanc, Chardonnay, Pinot Noir, Rosé
  • NOLO
    • The value of low-alcohol sales has been growing at 30% per annum over the last five years
    • Researchers forecast growth of around 14% per annum over the next five years
  • Small luxuries – such as chocolate & wine
  • New Zealand is "Almost local"
  • Re-engage with the market
Sources: *1 NZW Export Report August 2023; *2 NZW Export Reports June YE, 2013-2023; *3 Circana Australia Weighted Liquor, MAT 02/07/23

Canada

Overview

  • Number four export market with 4% share of export volume, MAT -4% *1
  • 10-year growth ranked second after US
    • 2013-2023 CAGR, +6.0% *2
  • 38 million people
    • Two-thirds of wine drinkers are under 55 years old
    • Annual still wine consumption of 447 million litres
  • Consumers understand and appreciate wines from New Zealand
    • growing interest outside of Sauvignon Blanc
  • Liquor monopoly system
    • Can provide structured opportunities for growth
  • While consumption and OTC sales are down
    • Wine is growing faster in dollars than in cases
    • There are opportunities for premium wines in key markets
  • New Zealand first in growth +6.4% *3
  • Over 90% of wine sales – four major markets
    • New Zealand over indexes in Ontario, British Columbia, and Alberta
    • New Zealand under indexes in Quebec
  • Sauvignon Blanc's share of New Zealand wine sales is 78% - 82% by province *3
  • 39% wine sales in the $15 to $25 segment *3

 

Headwinds

  • Increasing prices for the category, stretching over strategic price points
  • Lower-priced domestic and Chilean Sauvignon Blanc
  • Canadians are consuming less wine, 21% less servings since 2017
  • Two-thirds of wine drinkers are under 55, New Zealand skews to the older consumer
  • Diversity in formats is growing, bags, boxed, cans, etc.
 

Tailwinds

  • Diversifying Sauvignon Blanc styles, premiumization
  • Increasing growth on Rose, Pinot Noir, Pinot Gris
  • Refreshing styles and lighter options are trending with consumers
    • White and sparkling wines are taking share from red wine
  • Organic, natural, biodynamic tendencies, low alcohol for consumers
  • Overall sales in the super-premium, +$45
Sources: *1 NZW Export Report August 2023; *2 NZW Export Reports June YE, 2013-2023; *3 ACD Data, July 2023;
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