Winegrowers pulling out vineyards due to global oversupply of wine

Hundreds of hectares of vineyards are being pulled out across the country as the industry reacts to a global over supply of wine.

The New Zealand Winegrowers Association estimates about 2000 hectares of grapes have been uprooted, so by 2027 the total planted area of vineyards would be down three percent to 42,357 hectares.

A combination of several years of large vintages and falling alcohol consumption had contributed to a reduced demand for wine that'd seen a flurry of larger wine companies exiting the industry.

The worst hit region in New Zealand was Gisborne, where Indevin Group had halted supply contracts with its growers.

Ed Massey from the New Zealand Winegrowers Association told RNZ that'd resulted in 46 percent of the region's vineyards being ripped out.

"From 1138 hectares down to 614. That's a substantial change and we recognise the concern for growers and the wider community in that region.

"It's tied to that general reduction in demand for Sauvignon Blanc from regions that have traditionally supplied Marlborough," he said.

He said Hawke's Bay had also lost 9 percent of its vineyards, while Nelson was down 7 percent.

Hawke's Bay winemaker Leith Ashworth owned a boutique organic vineyard in Bridge Pa called Ash Ridge, and was seeing vines being removed all around him.

"It costs money to run a vineyard and if you're not able to sell the grapes, then the next best thing is basically to pull the vineyard out.

"I'm not sure what the numbers in Hawke's Bay are, but I guess it's well over 500 hectares. I've had 35 hectares just on my boundary removed in the last year. And at this stage I can't see it being replanted as a vineyard," he said.

He's hoping smaller wine producers would be more resilient to what the bigger companies had gone through.

"I'm being optimistic that we'll see a swing the other way quite fast. But whether it's two years away or five years away, it's pretty hard to predict.

"The way the industry's been changing so, so fast ... and trying to predict what people want, it's pretty hard at the moment. People seem to swing wine trends pretty regularly," said Ashworth.

That's something that viticulturist Ryan Fraser was trying to work out too. He's the vineyard manager for Paritua near Hastings and was pulling out a five hectare block of merlot vines.

"Constellation, they were a big buyer of Merlot for rosé and they've gone, they've sold to Poulter Group because they can get a cheaper rosé out of Europe, which is closer to the market at a better price point.

"It's left a lot of contract growers who supplied that rosé for a very long time and are sort of forced to change now or find a new home for all that Merlot. That's probably one of the bigger changes that's happened in Hawke's Bay," said Fraser.

He said many winegrowers were hitting pause while they figured out their next move.

"It's the apprehension of where people are going to land. You know, people aren't necessarily putting a whole bunch of plants in the ground at the moment because they don't know where the markets are that are going to stabilise," said Fraser.

But depsite all the uncertainty out there, the Winegrowers Association was feeling optimistic.

"The world wants sustainably produced premium wine that New Zealand produces, those lighter, fresher varieties, championed by Sauvignon Blanc, but others as well.

"I think we are in a good position to continue to grow the industry," said Massey.

Something the Ministry for Primary Industries agreed with, as it was estimating New Zealand's wine exports could grow by another $300 million by 2030 to reach $2.5 billion in value.