New Zealand’s wine future lies in quality, not quantity: What this means for the industry

Global wine consumption has softened in recent years, but that doesn't mean demand for quality wine has disappeared. Consumers may be drinking less often, but many continue to seek out premium wines when they do. While global oversupply issues are more acute in red wine markets, demand for New Zealand Sauvignon Blanc has remained comparatively resilient. This trend aligns well with New Zealand's long-term premium positioning, particularly for Marlborough Sauvignon Blanc, although strong branding, distribution and market access remain just as important as product quality.

While New Zealand wine remains well regarded internationally, the industry is currently working through a period of supply-demand rebalancing following several large vintages and higher inventory levels. As wineries focus on reducing stock levels, demand for grapes has softened, creating challenges for growers.

On the ground, the immediate trading environment is challenging, with lower grape prices, reduced yields, and rising costs placing pressure on cashflow.

BDO Director and Viticulture specialist, Rosie Jarvis from BDO Marlborough Tasman, shares what she’s seeing in the wine sector and some key tips for growers navigating a tougher market. 
 

“On the ground in Marlborough, what we've seen is a perfect storm. Grape prices have dropped significantly and yields have been capped, so growers have been hit on both sides by lower prices and lower volumes. The challenge is that costs haven't come down at the same pace. Labour, insurance, fertiliser and other operating costs remain high, which means many growers are facing pressure on profitability and cashflow at the same time. After a few years of strong returns, this has been a significant shift for the industry.” – Rosie Jarvis, Director and viticulture specialist, BDO Marlborough Tasman

 

How is New Zealand’s wine industry faring in 2026

Globally, wine consumption has declined by around 3% and is expected to continue to soften further over the next few years. However, demand for New Zealand wine has generally proven more resilient than many competing wine regions, although growth has slowed compared with previous years. We export around $2.1 billion of wine each year and about 90% of what we produce goes offshore, but this is a very small proportion of the global wine produced. 
 

“The current pressure is less about a collapse in demand for New Zealand wine and more about an industry-wide rebalancing following several very large vintages and the resulting increase in inventory holdings.  As wineries work through existing stock, many have reduced fruit intake requirements, which is contributing to lower grape prices and greater uncertainty for growers. There is cautious optimism that the industry will move closer to supply-demand balance over the next few years, although the timing of any recovery in grower returns remains uncertain. Cashflow is therefore tight for growers, and many are focused on preserving capital and getting through to the next vintage.”

For many growers, contract security has become just as important as grape pricing. Having certainty around future fruit supply agreements can significantly influence decisions around vineyard investment, redevelopment, financing and succession planning. In the current environment, the gap between contracted and uncontracted fruit has become increasingly significant. As a result, growers are taking very different approaches depending on their circumstances.
 

“Growers are responding in very different ways depending on their cash position, contract security, confidence, and long-term view of the market. Some are pulling out vines where the numbers no longer work, while others are using this period to redevelop and replant in anticipation of a future recovery. We’re also seeing more short-term land-use decisions, including seed crops or mothballing vineyards, as growers look for ways to preserve cash and keep options open.”

Mothballing involves maintaining the vineyard in a resting state, reducing inputs and not harvesting until production can continue later, when the market environment may have improved, or resources become available to enable a sustainable return to production. 

Rosie is seeing a real mix of responses from her clients, depending on their balance sheet strength and long-term view. 
 

“We’re spending a lot of time with clients on cashflow and scenario planning, helping them understand what the next 12 to 24 months could look like and what decisions they need to make now to protect long-term value. Succession is also becoming more complex. In the past, strong vineyard cashflows often supported relatively straightforward family repayment structures. With softer land values and tighter cashflow, those arrangements are much harder to sustain, which means growers need to think carefully about timing, debt, and the long-term viability of their succession plans.”

These challenges are also flowing through to vineyard values and transaction activity. We're seeing more caution across the market as growers, lenders and investors respond to lower profitability and increased uncertainty. This can affect refinancing discussions, equity positions and family succession arrangements, particularly where plans were developed during periods of stronger vineyard values.

What are the opportunities for New Zealand growers

Rosie explains that while it is a tough period, especially for growers, the industry is adjusting. She’s seeing more disciplined production, a renewed focus on quality and some deliberate decision making from her clients. 

The strongest opportunity is to keep leaning into what New Zealand wine is already known for: distinctive, premium, sustainably produced wine. While global consumption is softening, New Zealand does not need to compete on volume. Its long-term position is strongest when growers, wineries and exporters protect quality, provenance and regional reputation.

For growers, this means making careful decisions about vineyard investment, contracts, varieties and land use. The businesses that come through this period best are likely to be those that understand their numbers, manage cash carefully, and make deliberate decisions rather than reacting to short-term pressure.
 

Trade opportunities

Despite recent tariff changes creating pressure, the US remains the largest market for New Zealand wine. That makes it a critical market, but also highlights the importance of managing concentration risk and staying close to market developments from wineries, exporters and distributors.

The recent NZ-India Free Trade Agreement has also eased export trade barriers, reducing the historically prohibitive 150% tariff on wine to between 25 and 50% (depending on the value of the wine). India is one of the world’s largest and fastest-growing consumer markets, and the phased reduction of wine tariffs alongside the ‘Most Favoured Nation’ status should be seen as a positive signal for wineries to build their involvement in the market over the coming decade. While the improved market access is positive for the industry, it is likely to be a long-term growth story rather than an immediate solution to current inventory and pricing pressures.

Other emerging and developing markets also matter, even if they will take time to build. They are unlikely to replace the scale of the US, UK or Australia in the short term, but they highlight the importance of continuing to diversify export opportunities.

 

Sustainability and innovation

Sustainability remains an important point of difference for New Zealand wine, but it should also support commercial resilience. Improvements in water use, soil health, input management and energy efficiency can help protect long-term vineyard performance while also meeting customer expectations.

For most growers, innovation is less about major new technology and more about making better decisions through improved yield forecasting, vineyard monitoring, labour planning and cost control. In a challenging market, small improvements in quality, efficiency and decision-making can have a meaningful impact on profitability and long-term resilience.

Innovation also has an important role to play in engaging the next generation of wine consumers. As drinking habits evolve, the industry is exploring alternative formats and products, including canned wine, premium cask offerings, lower-alcohol and lower-carbohydrate options, and ready-to-drink products. While Sauvignon Blanc remains New Zealand's flagship variety, continued innovation in packaging and product development may help wineries reach younger consumers and create new avenues for growth.
 

Practical tips

For growers, Rosie recommends that the priority now should be to preserve cash, protect long-term value and make decisions based on realistic scenarios rather than short-term pressure.

• Keep cash flow visible. Maintain rolling forecasts that reflect realistic yield, price, payment timing and input cost assumptions. Update them regularly so pressure points are identified early.
• Scenario plan before making structural decisions. Model the financial impact of pulling out vines, mothballing, replanting or changing land use before committing to a course of action.
• Protect quality where it matters most. Cost control is important, but growers should avoid cutting inputs in ways that undermine long-term vineyard performance or fruit quality.
• Review contracts and customer concentration. Understand renewal dates, pricing mechanisms, volume commitments and exposure to any one winery, variety or market.
• Talk to lenders and advisers early. Clear forecasts and a practical plan can support funding conversations before cashflow pressure becomes urgent.
• Revisit succession plans. Tighter cashflow and softer land values can affect repayment expectations, ownership timelines and the viability of existing family succession arrangements.