'Full-bodied growth' forecast for wine industry, despite consumers drinking less
Wine drinkers are changing their habits - opting to drink better quality wines, less often.
A report by ANZ has found that more consumers are choosing to reduce their consumption, as well as fork out a few extra dollars for a nicer bottle of wine.
In recent years, there had been an increased focus on reducing youth binge drinking, as well as raising awareness of the health implications of daily recreational wine drinking by middle-aged consumers.
"Many consumers appear to have opted for a 'quality over quantity' attitude," ANZ agri-economist Con Williams said. "All of these trends suit New Zealand's market positioning."
The report also said the demand for more "sophisticated and unique styles of wine" was being driven by educational promotion on the different types of wine and their combination with food.
On top of that, an influential consumer trend around health and wellness was leading to more low-alcohol wines and smaller servings, it said.
"These trends, alongside a more knowledgeable consumer, are driving an increase of domestic product sales at the premium end as consumers 'trade-up'."
However, changing lifestyles and demographics has meant the volume of wine consumed per capita was in slow decline, the report said.
"Health concerns around the amount of alcohol being consumed are having an impact," Williams admitted.
But that impact is not enough to effect annual growth of the industry.
The wine industry has doubled its earnings over the past 10 years, with average annual growth of 8.4 per cent lifting annual sales to around $2 billion.
The growth is being led by the country's "internationally fashionable" sauvignon blanc, which accounts for over 50 per cent of planted area, close to 70 per cent of production, and over 80 per cent of exports.
In order to meet growing demand, vineyard area was set to increase significantly over the next five years, with new plantings dominated by sauvignon blanc in Marlborough, the report said.
Planting of other varieties such as chardonnay, pinot gris, pinot noir and merlot were also on the rise - albeit on a smaller scale, it said.
"Will there be further upside for New Zealand wine? The answer appears to be yes," Williams said.
"As with many goods, fashion has a role to play and Sauvignon Blanc remains 'in' as a wine preference in established markets and is finding favour with new consumers in developed and developing markets."
Globally, New Zealand was a small player, accounting for just 1 per cent of global production and 3 per cent of the value of global wine trade, he said.
"The higher value earned by our producers is underpinned by the premium that quality New Zealand wine is able to command in global markets."
New Zealand's domestic market and top three export markets of Australia, the US and UK account for 86 per cent of sales and 83 per cent of revenue, Williams said.
While the potential of other markets such as Germany, the Netherlands and Canada was slowly increasing, the top four markets were expected to continue to dominate sales into the 2020s, he said.
Wine industry at a glance:
* The viticulture sector has grown strongly over the last 10 years
* Planting surveys suggest vineyard area is set to expand by as much as 7000 hectares (or 20 per cent) by 2020/21
* The Marlborough region will remain the epicentre of the sector
* Sauvignon blanc is expected to continue to dominate plantings
* Pinot noir leads the red wine varietals
* Wineries are getting larger
* Over the last 10 years total sector earnings have doubled
* Total New Zealand wine sales are now around $2 billion per annum
* On a global basis, New Zealand is a small player
* New Zealand's domestic market, and top three export markets (Australia, the US and UK), account for 86 per cent of total wine sales and 83 per cent of total sector revenue
* Around a quarter of New Zealand's wine is consumed domestically - the rest is exported
* New Zealand consumers' strong preference is for still and sparkling wines
* The majority of New Zealand's sales are through the retail and online sale channels, as opposed to food service
* Premium wine products continue to grow at the expense of cheaper bulk wine, with increased sales through online channels
* In the international market, most of New Zealand's wine is generally still sold through the retail channel
* Smaller wineries are more reliant on cellar door sales and tourism
*Spending from tourism is significant, with 18 per cent of international tourists visiting a winery
* The United States is New Zealand's largest export market on both a volume and value basis
* The main US sales channel for wine is off-premise, accounting for more than 80 per cent of wine sold
* On-premise sales are more sluggish, as consumers appear to be buying more wine by the glass instead of the bottle