New Zealand’s wines are in higher demand than ever, at a time when supply is under unprecedented pressure. David Williams considers the state of play in a country where life for winemakers is nothing like as straightforward as they would like it to be
As a wise man once said, you can only have a shortage of something people want or need. And, as many Wine Merchant readers will have noticed perhaps more than ever over the past year, an awful lot of people want New Zealand Sauvignon Blanc.
As we reported back in September, a combination of factors has meant it has been something of a challenge to keep servicing British wine drinkers’ apparently insatiable thirst for the inimitable gooseberry bush bungee-jump flavours (to paraphrase the New Zealand journalist Bob Campbell MW’s memorable pen portrait of the style’s appeal).
The main contributing factor is the shortness of the 2021 harvest – down 19% on the previous year, largely because of what New Zealand Winegrowers called “inclement” late spring weather. But long-term labour shortages, which were exacerbated by New Zealand’s strict Covid travel restrictions preventing the arrival of temporary workers during harvest, also played their part.
With many producers already struggling to keep up with growing global demand in previous, bumper years, the 2021 shortfall has meant a period of careful stock management and tight allocation, with some importers stretching out their 2020 stocks a little longer. At the same time supermarkets and other small-margin operators have had difficulty sourcing the kind of bargain-basement prices that most brands and wineries in any case believe are damaging to New Zealand’s premium image.
New Zealand is not the only country dealing with a smaller crop in 2021. Production across Europe was massively down, with some producers in that other leading Sauvignon zone, the Loire Valley, confronting losses as high as 80% thanks to a mix of late frost, hail and mildew.
New Zealand is also far from alone in experiencing another of the issues that has impacted on stock availability in the UK: problems with the global shipping network. As reported in September, delays of several weeks and months have been experienced by UK importers on wines from the southern hemisphere thanks to a chickens-coming-home-to-roost moment in which Covid restrictions, long-term global shortages in shipping containers and HGV drivers, and post-Brexit paperwork have all combined to give headaches to UK importers.
2022 and beyond
As the country’s winemakers look ahead to what they hope (and, at the time of writing, believe) will be a bigger 2022 harvest, steps are already being taken to address the significant challenge of labour shortages.
The problem is rooted in the New Zealand wine industry’s reliance on overseas workers, especially at harvest time. In Marlborough – which, with 28,360ha of New Zealand’s total 40,323ha vineyard, accounts for almost three-quarters of total production – help from overseas, which traditionally included a high number of backpackers, including numerous trained winemaking graduates from Europe, the US, South Africa and elsewhere, usually accounts for around two-thirds of the harvest workforce.
With New Zealand’s exceptionally tough Covid travel restrictions essentially closing the border to all travellers, including overseas-based NZ nationals, since the pandemic began, the industry had to lobby the national government hard to allow a limited number of seasonal workers (two cohorts of 2,000 individuals) to be granted an exemption to enter the country in 2021.
At the time of writing, the New Zealand government’s plans to relax travel restrictions for foreign nationals are not due to come into force until the end of harvest this year: fully vaccinated travellers will be allowed to enter the country from April 30.
The industry has therefore had to work closely with the New Zealand government to expand the seasonal worker visa scheme this year, as well as developing a variety of incentives to help grow the local workforce, particularly during the seasonal peaks of pruning and picking.
Currently, around 21,000 New Zealand nationals are employed by the domestic wine business. With labour shortages also biting in other industries, and with New Zealand’s agricultural workforce notorious, in the words of New Zealand Winegrowers, for its “immobility”, the wine industry will be hoping that this will be the last vintage in which travel restrictions play a part.
The effects of popularity
Of course, any problems New Zealand might be facing are the kind that football managers blessed with more good players than they have spaces for in the team tend to describe as “the right kind of dilemma”: they are all a product of the country’s astonishing success.
The past year saw New Zealand wine pass yet another milestone that was considered ambitious when it was set as an official target by New Zealand Winegrowers a decade ago – and all but unthinkable as recently as the early 2000s. By the end of December 2020, exports had reached NZ$2bn (£1.03bn).
And if some of the supply-chain pressures alluded to earlier in this piece led to a drop in sales during the year to June 2021 (the first fall in exports for 26 years, according to New Zealand Winegrowers), the underlying indicators remain strong for New Zealand.
Certainly, the UK, where double-digit off-trade growth has been a feature pre-shortage, and where the average retail per-bottle price is now more than £1.30 higher than the GB average and rising, New Zealand remains in rude health.
Consistent work by both the industry as a collective (through the medium of New Zealand Winegrowers) and by individual brands over a period of more than 25 years has established New Zealand as one of – if not the – greenest wine-producing countries in the world (see below for our pick of some of New Zealand’s best and most adventurous organic, biodynamic and natural producers).
Uniquely, New Zealand Winegrowers make adherence to a set of rules on environmental best practice (Sustainable Winegrowing New Zealand) a precondition of inclusion in the organisation’s marketing and promotional plans. The NZ wine industry has a target of being carbon neutral by 2050 and, as it prepares to meet the target, New Zealand Winegrowers carried out extensive research, asking all of its member vineyards and wineries to provide details about their greenhouse gas emissions.
With concerns about sustainability and carbon footprint arguably never higher in the UK in the wake of COP26, the focus on sustainability has proved to be a wise strategy commercially as well as ethically.
“Sustainability credentials now play an important role in the perception of premium products,” is how New Zealand Winegrowers puts it in the organisation’s informative annual report. “Goods that are produced with respect for the natural world, and for the people throughout the value chain, are seen as more desirable to modern, informed consumers.”
While any press attention about potential shortages from New Zealand inevitably tends to focus on Sauvignon Blanc, many independent merchants have been more troubled by scarcity of the country’s other varieties, notably Pinot Noir, which, given that barrel ageing means it takes longer to make, will be felt a little later down the line.
The crop for Pinot Noir was roughly a third down in 2021 versus 2020, and with the area devoted to the variety having increased only very slowly in the past 10 years (from 5,388ha in 2012 to 5,779ha in 2021), the Pinot crush was less than a tenth the size of Sauvignon’s.
With quality inarguably never higher, thanks to a combination of greater vine age and accumulated experience, Pinot can be seen as both a microcosm of the wider New Zealand industry, as well as being reminiscent of another Pinot region.
Just like Burgundy, 2021 New Zealand Pinot Noir is a study in just how high demand for something can go when supply gets scarce.