Wine Importing and Marketing Services

New Zealand Wine Industry Beset by Surging Demand, Production Shortages and Supply Chain Woes

An image of a vineyard worker at Loveblock Farm Winery located in Awatere Valley, Marlborough, New Zealand. / Photo by: Lisa Duncan

Exacerbated by a grape shortage, the New Zealand wine industry, already reeling with effects of the pandemic, faces yet another looming challenge. A supply shortage is on the horizon as vineyards struggle to keep pace with steadily rising demand.

According to 2021 vintage reports from New Zealand Winegrowers, the national organization for New Zealand’s grape and wine industry, the country produced 7–8 million fewer cases of Marlborough Sauvignon Blanc than in the year prior. Philip Gregan, CEO of New Zealand Winegrowers, says there were 370,000 tonnes (approximately 407,855 U.S. tons) of grapes harvested during the 2021 vintage, down 19% from last year’s crop.

“Although the harvest was smaller than hoped for, the quality of the 2021 vintage is being described as exceptional, and the wines will be something special for consumers,” says Gregan.

Managing the ways that supply constraints impact the market will be a key focus for many in the New Zealand wine industry as the pandemic evolves. Gregan believes that the smaller harvest means many New Zealand wineries will face tough distribution decisions.

Protesters near cargo ships anchored in the Hauraki Gulf in December 2020 / Photo courtesy Invivio Wines

“The impact of the smaller vintage is already being felt, with export value down for the first time in 26 years,” he says. “For many wineries, with stocks already low from strong demand, this means a challenging year ahead to meet the demands of trade customers, retailers and consumers.”

The shortage can be partially attributed to challenging vintage weather conditions.

“We had two successive cool and wet spring periods, which meant that the plants produced less flowers and therefore less potential fruit,” says Tim Lightbourne, cofounder of Auckland-based wine company Invivo. “A further poor flowering period in November and December 2020 helped create the perfect storm of poor weather at exactly the right time. Subsequently, the region was 25–30% down on average.”

Furthermore, in 2020, there was unprecedented international demand for Marlborough Sauvignon Blanc. The trend has continued into 2021.

“Our existing export customers are requesting significantly higher volumes of our wine than we’ve ever experienced before.” — Tim Lightbourne, Invivo

Additionally, the pandemic has greatly impacted the supply chain.

“Wineries now report that orders are being lost because of supply chain issues, and unfortunately this is an unprecedented situation, with no near-term solution,” says Gregan.

Transport costs have more than doubled from pre-pandemic figures, he says, while shipping reliability has plummeted.