How is NZ’s wine industry doing amid COVID-19?

Highlights

• Wine is a primary industry in NZ.
• Marlborough Wine Estate made notable progress with its growth strategy during the year.
• Foley Wines will procure the Zebra Bendigo Flat Vineyard from Zebra Vineyards.

Wine is a primary industry in New Zealand. NZ’s wine industry has a market size of $3 billion, employs over 4K people and the wine is exported worldwide.

Effects of the COVID-19 pandemic on markets, border, and supply chains, continued to impact growers and wineries in 2021 with orders being lost due to supply chain issues.

Recently, NZ has initiated a free trade agreement (FTA) with the UK that would hugely benefit wine manufacturers and connoisseurs across both the countries. Under the FTA, tariffs will be removed from a wide range of goods with a reduction in trade barriers as well.

Amid this backdrop, let’s have a look at the performance of the 2 NZX-listed wine stocks.

Image source: © 2021 Kalkine Media, Data source- EODHD/Others

Marlborough Wine Estates Group Limited (NZX:MWE)

Marlborough Wine Estate, a vineyards operator in the Awatere Valley, witnessed good results by pursuing its growth strategy and made progress with growing domestic sales and expanding international market distribution. The COVID-19 pandemic still remains a major hurdle for business development as MWE’s many international clients are focused on fine wine retail and on-premise.

RELATED READ: How would NZX wine stocks benefit from Free Trade Agreement?

The Group has invested in marketing to support the release of multiple new products into Foodstuffs and Countdown supermarket chains. MWE’s group sales increased by 12% amid the COVID-19 trading atmosphere while total sales revenue rose 5% to $6.7 million. However, MWE reported a net loss after a tax of $0.6 million for FY21 due to lower harvest in 2021.

ALSO READ: 5 NZX stocks with over 100% returns in 2021

There is continued strong international demand for NZ wines, and Marlborough Wine Estates is well positioned to benefit from the same.

On 4 November, at the time of writing, Marlborough Wine was trading flat at NZ$0.28, at the time of writing.

Foley Wines Limited (NZX:FWL)

The most iconic wine producers in NZ, Foley Wines, announced last month that it had inked a deal to procure the Zebra Bendigo Flat Vineyard from “Zebra Vineyards” in Bendigo, Central Otago.

The property with an area of 55.5 hectares has good water and frost protection in place and is well-managed.

ALSO READ: Why are NZX dairy stocks vital to the nation’s economy?

Mark Turnbull, CEO of Foley Wines, was pleased with the purchase of Zebra Vineyards as the high-quality vineyard will bolster Foley’s need to secure a high-quality fruit supply for growing FWL’s Roaring Meg brand in the future.

DON’T MISS READING: Sanford & King Salmon: How are NZX fishing stocks faring?

The transaction will be funded with the Bank of New Zealand with price remaining confidential.

At the time of writing, on 4 November, Foley Wines remained unchanged at NZ$1.63.

Bottom Line

NZ’s wine industry comprises one of the major export producing sectors of NZ with the industry set to grow in future.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)