12 December 2006

Projections indicate that New Zealand’s wine exports will exceed 70 million litres, with a value of nearly NZ$700 million, in 2007. By 2010, the New Zealand wine industry is forecast to achieve exports of NZ$1 billion and total sales of NZ$1.5 billion.

Investment New Zealand food and beverages investment manager Adrian Bosher says this focus on expansion and export growth has created opportunities for international investors to provide wineries with access to capital for expansion and to new distribution channels.

“In addition, the presence of a large number of small and medium wineries means there are opportunities for consolidation and mergers between medium- and small-sized wineries to achieve benefits of size and scale in relation to processing and marketing.”

New Zealand wines enjoy a unique position in the global market – while small in international terms, they occupy a strong premium niche, based on a distinctive product and reputation. These wines frequently win international accolades and awards, and the premium wineries are well known, with their products featuring regularly on overseas wine lists. The most distinctive and recognised are the Sauvignon Blanc wines produced in Marlborough.

This reputation for high-quality wines has enabled the industry to achieve premium prices for its wines in all its major export markets, despite the current “oversupply” glut in the lower end of the market.

Sauvignon Blanc will continue to provide the foundation for volume and sales growth, while other varieties, notably Pinot Noir, are forecast to make up a greater percentage of international sales. The United Kingdom and Australia are expected to remain major export markets, while the United States is seen as having large growth potential. There are also considerable opportunities for growth in markets in Asia and parts of Europe.

“The industry is projecting growth across wineries of all sizes, creating opportunities for investors looking to partner businesses with strong product lines and future potential,” Bosher says.

Pathways to market entry include greenfields development, taking a cornerstone shareholding in an existing winery, acquiring one or more medium-sized wineries and recapitalising, or acquiring a large winery.

There are also opportunities to invest through complementary services, such as providing access to distribution channels. While international competition is making it increasingly difficult for small and medium-sized wineries to access distribution channels, there are proven advantages in including premium New Zealand wines in a distribution portfolio.

Further opportunities lie in acquiring or partnering with a premium winery to provide a complementary range of products to the market.

For more information, please contact:

hayley.tangaroa@investmentnz.govt.nz

+64 9 915 4277