The annual wine industry benchmarking survey is on the nail according to Lyn Bevin, executive officer of Hawke’s Bay Winegrowers.
“I would agree we are seeing a recovery, even if it’s slow to translate through to increased profitability to Hawke’s Bay wineries and growers. Looking into the recovery, Hawke’s Bay is positioning itself to make the most of improving conditions,” says Ms Bevin.
In the Hawke’s Bay Winegrowers annual report, chairman Nicholas Buck highlighted the region’s drive for quality as the reason behind increasing sales.
Over the last five years Hawke’s Bay wineries have reduced yields per hectare by 21 percent, improving ripeness and concentrating flavours. For the same period Hawke’s Bay red wine exports have increased 48 percent.
But don’t expect our region’s wineries and growers to be throwing the cash around says Ms Bevin.
“There is a long way to go – most of our Hawke’s Bay wineries fall into the smaller categories of under $5 million in total revenue and these wineries are barely gaining profitable returns.
“From the report bigger wineries are able to lower prices and combine bulk wine exports to their income mix. Smaller wineries also have proportionately higher administration costs to deal with and often owners don’t reimburse themselves at the rate of a commercial salary.”
She notes that like the Deloitte’s report, Hawke’s Bay Winegrowers remains concerned about the management of bulk wine exports and has brought this to the attention of the national body, New Zealand Winegrowers, several times this year.
Across all the wineries surveyed Deloitte reports that more than 50 percent of case sales of branded wine are exported.
“While we don’t have this sort of information for Hawke’s Bay this could also be true for the region”, says Ms Bevin.
“Having said that, Hawke’s Bay also has a significant number of very small wineries producing less than 5,000 cases per annum and they are more dependent on cellar door sales and wine tourism.”
The report encourages collaboration between wineries in international markets.
“We have been told this several times going back to the BCG (Boston Consulting Group) study in 2000 and a Massachusetts Institute of Technology Entrepreneurship Centre project in 2007, and the same message was delivered to regional wineries by Steve Green, deputy chairman of New
Zealand Winegrowers.
“Our Hawke’s Bay wineries aren’t competing against each other in the global market – we are too small for that. Instead the individual wineries must work together to gain critical marketing mass. We are a very diverse wine-making region, unlike any other in the world. What we have in common is Hawke’s Bay.”
According to the report, exchange rates are the biggest issue across most wineries but the second biggest issue is marketing our wine overseas.
Mr Buck agrees.
“Collaborative marketing is vital but can only be done in tandem with the industry’s own ability to fund activity. New Zealand Winegrowers have recently undergone a strategic review and we look forward to seeing what will be done to address these marketing concerns within the industry and management of bulk shipments.”
For further information:
Lyn Bevin
Tel: 027 621 7891
