New Zealand winegrowers leave grapes unpicked as supply hangover bites

“But we are dealing with something of a supply hangover at the moment, that’s certainly producing some challenges for the industry.

“We had a small crop in 2024, but in 2022, 2023 and 2025 we had very good-sized crops, and last year’s crop was just probably sort of once in a generation – very large.

“To manage that crop – and producers do it each year – there were a lot of grapes left on the vine.

“When you combine a relatively large crop that was harvested with uncertainty about market direction, that produces some challenges for people.”

Growers will face similar challenges this year.

“They will be managing their grape intake quite strictly – that’s certainly what we’re hearing from both wineries and grape growers,” he said.

“The last thing anybody wants to do is add to the challenge by harvesting more grapes than we can sell.”

Growing conditions were favourable over the spring.

“There’s been obviously a bit of up and down weather in some parts of the country, but, in most of the producing areas, I think people are looking fairly happy with the crop that’s out there at the moment,” Gregan said.

“The weather, despite challenges in some places, has been nice and warm in lots of areas, so that bodes well.”

In the first half of the current financial year to June 30, exports were up by more than 19%, he said.

New Zealand exports around $750 million of wine to the US each year, which is now attracting $100m of tariff costs.

In the big picture, the industry is well aware of the trend in declining alcohol consumption.

But Gregan said consumption of the styles of wine that New Zealand made was growing.

“That’s a positive for us, and we certainly see lots of opportunities and in the new markets there is a real opportunity to grow our sales even further.

“In our key export markets, people are still continuing to buy New Zealand wine, and they’re actually buying more of it.

“We have just got to get through these short-term challenges at the moment.”

NZ Winegrowers’ 2025 annual report said the home wine market in New Zealand was the fourth-largest market overall.

“Tough economic conditions are having an impact on sales but there are longer-term trends as well,” the report said.

“Wine consumption is at its lowest level in more than 20 years; per capita wine sales are at a 30-year low.

“Reduced consumption by Kiwis reflects evolving consumer trends, generational shifts, and new buying patterns.

“These are challenges wineries need to respond to dynamically if wine is to regain favour with New Zealand consumers.”

Against the backdrop of an uncertain demand outlook, it was unsurprising that wineries limited their grape intake in 2025, the report said.

“While this bodes very well for the wine quality it meant – for the first time in many years – that a significant quantity of grapes was left unharvested.

“The sight of unharvested grapes lingering on vine is emblematic of the uncertainty facing producers.

“For some growers, not selling their crop will have seen their income slashed in the current season.

“For wineries, inventories will have been higher than expected and they did not want to add to that pressure by producing more wine than they could expect to sell.”

One medium-sized Marlborough grape grower, who asked to remain anonymous, said the industry received a boost during the Covid years because wine consumption increased around the world with more people being at home more often.

“The warehouses were all emptied out, and so all the wineries rushed to restock these warehouses, and you had very slow supply chains at the same time.

“And everyone thought there was this enormous demand and people were desperately trying to send it overseas.

“So in 2022 - which was not a great vintage - there was quite a lot of demand for grapes and quite a big yield in that year.

“Then 2023 was a poor vintage in the North Island because of Cyclone Gabrielle but a very good vintage in the South Island and, once again, with reasonable yields.

“By then, sales were starting to slow because that initial post-Covid re-stocking had come to an end.

“Then you had the 2024 vintage, which was a high-quality vintage but with very low yields, which sort of deferred the problem for a year.

“Then you had 2025 - a potentially massive yielding vintage - just when the wineries discovered they didn’t need any grapes anymore, so it hit very, very quickly.”

At the same time, demand was falling around the world and wineries started “capping” growers - mostly of sauvignon blanc - in terms of how much produce they were prepared to take.

Wineries have at times taken whatever producers can provide.

This time growers are generally being capped at 12 tonnes per hectare.

“Any grower that is able to sell their grapes this year is only breaking even because it still costs you the same to spray the block and to prune the block and to trim it and maintain it all year,” he said.

The talk in the industry was that well over 100,000 tonnes of grapes last year were not picked.

The grower said half his vineyard had been mothballed and will not be picked this year.

“We do what is called barrel pruning, and we’re doing minimal spraying and trimming just so that we don’t get disease or anything spreading over the rest of the vineyard.

“It’s probably the most serious thing that’s happened to the New Zealand wine industry.”

He likened it to the crash of 2008, when the Global Financial Crisis drove a fall in demand just when a big crop of sauvignon blanc was coming out of Marlborough.

“Nobody’s got any idea how long it will take to bounce back again, so it’s not a matter of hanging on for a year or possibly two years. We may have a new equilibrium.

“If things don’t bounce back quickly, expect more vineyards to be pulled out.

“This has all happened at a time when all of a sudden the world has stopped drinking alcohol.

“For quite a while, wine competed with craft beer and gin in the alcohol market.

“Now it’s competing with people not drinking alcohol at all,” the grower said.

He doubted the grape over-supply would result in a wine glut as wine producers had a limited number of tanks in their wineries.

Industry analysts expect it may take two to three years for supply and demand to rebalance.

NZX-listed producer Delegat said the New Zealand wine industry was experiencing elevated inventories.

“This environment has led to deep discounting by many competitor brands at retail, as producers seek to clear excess stock,” Delegat chief executive Murray Annabell told Delegat’s annual meeting in December.

He said to address the long-inventory situation, Delegat was taking steps to moderate harvest levels through “disciplined viticulture management”.

Across the Tasman, the wine industry is also facing similar problems.

The Australian Financial Review (AFR) said last month the winery and vineyard market was at a tipping point amid struggling sales, with an increasing number of sellers – from large corporates to smaller vintners – deciding to put their properties on the market.

The AFR said a surplus of fruit, the turn by younger people towards drinking less alcohol or none at all, and a surge in online wine sales detracting from visits to cellar doors were behind the oversupply of wineries and vineyards up for sale.