According to the Report issued by Deloitte “Vintage 2014 – New Zealand WINE Industry Benchmarking Survey,” Winegrower in 2014 produced yet another record harvest of 445,000 tons of grapes; up significantly from a record 2013 of 345,000 tons. Fortunately, the wine industry seems to have learned from its past experiences with oversupply and a difficult economic environment and has been able to deal with this increased supply. The larger end of the market has an average profitability before tax, for all the categories of wineries, ranging from 3.3% to 17.6%. The report also concludes that the increase in profitability has generally been the trend for the last four years; it shows that the turnaround is increasingly sustainable.

Other key metrics within the survey results also continue to support a turnaround at the larger end of the market. This year’s results for typical banking covenants such as interest cover and debt to equity ratios are sound for the $10m+ categories, which tend to alleviate the concerns around the high external debt levels that were present in previous surveys.

While there was a record harvest for 2014, inventory levels do not increase significantly this year. This is a positive sign, showing that wineries are better placed to deal with the increased supply by being able to dispose of the excess and avoid having large volumes remain on hand. Overall inventory levels have remained relatively stable across all categories but with marginal increases among the smaller three categories. This is potentially due to not having access to the higher volume distribution channels of, the larger categories. The $20m+ category increased significantly. However, this is a result of new participants joining the survey for 2014.

Exports remain an integral part of the industry, which is a likely driver of survey participants to report continually the high New Zealand dollar as the number one ranked industry issue. The high New Zealand dollar is something that all exporters have to contend with, and recent drops should facilitate more sustainable prices and volumes to overseas markets. We propose that any decreases in volumes exposed could be due to a change in the mix of participants this year rather than from less global demand for New Zealand wine. This conclusion is supported by NZ winegrower’s statistics that show export volumes remaining relatively consistent from 2013. It could also reflect that exchange rates are still the number one ranked issue by wineries.

It is estimated that the New Zealand wine industry has a turnover of approximately $2 billion per annum with $1.33 billion of this coming from export earnings. Combine this with significant investment in wineries, vineyards and plant and equipment and the industry plays an important part in the well-being of the New Zealand economy. These growth trends bode extremely well for Industrial Ultrasonic Solutions NZ as it establishes its brand in the marketplace.[1]


[1] Ibid.