New Zealand wineries increase profitability again in 2014
This run comes despite concerns over the impact of oversupply, high levels of external debt, the financial crisis and the turbulent bulk market
New Zealand. Winegrowers are enjoying increased profitability, according to the Deloitte Vintage 2014 survey.
The survey divides producers into five categories according to size: those with turnover higher than NZ$20m (US$15.3m), those between NZ$10m and NZ$20m, those between NZ$5m and NZ$10m, NZ$1.5m to NZ$5m, and those below NZ$1.5m. For the first time in seven years it found that all categories reported profitability before tax. Furthermore, it reported that since 2010 there has been a general trend of growing profitability.
This run comes despite concerns over the impact of oversupply, high levels of external debt, the financial crisis and the turbulent bulk market.
One of the biggest reasons for growing profitability is that kiwi growers have managed to turn excess stock into revenue. This knack will be especially important in 2015 and beyond, following a bumper crop in 2014, where some 445,000 tonnes of grapes were harvested.
Companies with turnover higher than NZ$20m were the most profitable. Here an average profit rate of 17.6% was recorded. Generally, the larger the company the better equipped it was to realise greater profitability.
The report estimated the total value of the New Zealand wine industry to be around NZ$2bn (US$1.53bn) in 2014. Of this, NZ$1.36bn (US$1.04bn) came through exports. Exchange rates continue to be the biggest issue facing those who took part in the survey.