New Zealand wine industry financial metrics remain sound

Financial benchmarking survey shows industry resilience

The New Zealand wine industry continues to show sound financial metrics in 2015 on the back of profitability in all but the smallest wineries and stable or increased gross margins across the board, according to the tenth annual financial benchmarking survey released today by Deloitte.

Vintage 2015 tracks the financial results of wineries accounting for nearly 40% of the industry’s total wine production by volume. Survey respondents have been categorised into bands according to revenue to assist comparison within the industry.

Deloitte partner Peter Felstead says that overall the industry continues to show solid results.

“This year’s results continue the trend of increasingly sustainable profitability in all but the smallest wineries that we have seen for the last five years,” says Mr Felstead.

“While not all categories were profitable we are pleased to see that gross margins were largely maintained or increased from 2014 to 2015, which includes much of the record harvests of the 2013 and 2014 years.”

The 2015 harvest produced 326,000 tonnes of grapes; down 27% from the peak of the consecutive record volumes of 2014 (445,000 tonnes) and 2013 (345,000 tonnes).

“This year’s lower harvest likely comes as a relief for some in the industry after the efforts of dealing with the increased supply from the record volumes of prior harvests,” says Mr Felstead.

”But this may also present a challenge over the next year in terms of meeting the volume expectations of customers as well as potentially driving an increase in prices. We’ll most likely see the remainder of the impact of the lower harvest in the 2016 results,” he adds.

The most profitable revenue band in this year’s survey, with an average profit of 30.5%, was wineries earning more than $20m in revenue. This was followed by the $10-20m category at 15.9%, the $1.5-5m category at 7.1% and the $5-10m category at 7.0%. The smallest category ($0-1.5m) showed a loss of 9.0% for the year.

“In general, the survey results show that profitability increases with size.  Larger wineries can achieve economies of scale while reporting the lowest proportional general and administrative costs,” says Mr Felstead. 

“The loss shown by our smallest winery respondents may in part be a reflection of a larger than usual proportion of revenue being spent on sales salaries and advertising expenses.  This could imply that, more and more, smaller wineries are adopting a strategy of going direct to market, including leveraging their presence online, for sales direct to the consumer.”

Other key metrics in the survey, such as healthy debt to equity ratios and acceptable inventory levels despite two previous years of record harvests, further support optimism in the industry.

It is estimated that the wine industry has an annual turnover of approximately $2 billion with $1.42 billion of this coming from export earnings. The importance of exports to the industry is a trend that has been noted in prior surveys and is again prominent in Vintage 2015.

This year’s top three issues as reported by respondents are “exchange rates,” “grape supply (too little)” and “marketing product overseas.” 

“This is the first year that “grape supply (too little)” has been in the top three issues, supporting our view that vineyards had difficulties sourcing grapes in the smaller 2015 Vintage and strong sales in the past year,” says Mr Felstead.

To read or download the full Vintage 2015 report, go to

Media contact:

Matt Huntington
Deloitte New Zealand Communications Manager
04 470 3771

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