The burn-off piles visible across Gisborne, Hawke's Bay and Marlborough tell a confronting story. New Zealand's wine industry is navigating one of its most significant contractions in a generation, driven by a global oversupply of grapes, softening alcohol consumption, and a second consecutive year of unharvested fruit in some regions [2]. For wineries and growers, the decisions ahead are not simply agronomic — they are financial, strategic and, ultimately, about the long-term viability of each business.

Understanding the Scale of What's Happening

The numbers are stark. In Gisborne alone, around 660 hectares of vines have been pulled out — roughly half the region's total harvested area of 1,340 hectares [1]. GisVin's general manager Hamish Jackson described the economic impact: an estimated NZ$19.5 million in lost income to growers, support services, pruners, harvesters and the broader supply chain [1]. Hawke's Bay grower Wim Barendsen, who has pulled 7 hectares on his own property, estimated the region-wide figure at approximately 1,000 hectares [1].

Nationally, New Zealand's planted vine area grew from 36,225 hectares in 2015 to 42,520 hectares in 2025, while wine production rose from 313.9 million litres to 378.4 million litres over the same period [2]. That expansion, combined with a global demand slowdown, has created the current oversupply. A 2025 Gallup survey found that 54% of adults said they use alcoholic beverages — a 4% decline from the 2024 survey and an 8% decline from 2023 [2]. The mean number of drinks consumed in a seven-day period fell from 3.8 in 2024 to 2.8 in 2025 [2].

New Zealand Winegrowers' acting chief executive Sarah Wilson has acknowledged it is still too early to quantify the full volume of grapes left unpicked or vines being removed [2]. "We don't know how long this process will take, and individual businesses may be impacted in different ways," she said [2].

The Pull Decision: A Framework for Growers

Not every block warrants removal. The decision to pull vines should be weighed against several factors:

Age and productive life. In Marlborough, sauvignon blanc vines — the dominant variety — live for only 25 to 30 years [2]. James Macdonald, chair of Marlborough Winegrowers, noted that the company he works for, Hunter's Marlborough, annually replaces 3% of its vines as part of a normal replanting cycle [2]. Some blocks being removed today may simply have reached the end of their economic life and could later be replanted with newer, more productive vines — a point echoed by New Zealand Winegrowers.

Contract status. Growers with lapsed winery contracts face a fundamentally different calculus to those with active supply agreements. A block generating no revenue and still incurring ongoing maintenance costs — spraying, pruning, water — is a cash drain. Without a clear path back to a contract, the pull decision often becomes a matter of when, not if.

Land-use alternatives. Diversification sounds straightforward but is frequently constrained by resource consents. Hawke's Bay grower Barendsen explained that water consent restrictions mean he cannot simply shift to apples across his whole property: "I can only grow apples on half my land and have to leave the other half unirrigated." Growers should obtain specific advice on their consent conditions before assuming diversification is viable [1].

Market segment. Marlborough Winegrowers chair Macdonald noted that bulk exported wine — shipped in large bladders for bottling as supermarket own-label products in the United Kingdom — is the most affected segment [2]. NZ-branded wine has shown greater resilience due to customer loyalty. White wine has also fared better than red, in part due to its lower alcohol content [2]. If your production sits in the premium branded category, the pull calculus looks different to bulk commodity supply.

Recording the Financial Impact: Asset Write-Downs

When vines are removed, the financial records must reflect reality. Established vineyard blocks typically sit on the balance sheet as biological assets or as components of property, plant and equipment, depending on how your accountant has classified them. When a block is pulled, that carrying value needs to be assessed and, in most cases, written down to reflect the loss.

Key considerations for your finance team or adviser:

Timing of impairment recognition. Once the decision to pull is made and the block can no longer generate future economic benefit, the write-down should be recognised in the period the decision is made — not deferred.
Partial write-downs vs. full derecognition. If only a portion of a block is removed, the asset value needs to be apportioned accordingly. Keep block-level records precise so the calculation is defensible.
Replanting costs as a new asset. If you intend to replant, the new vines will begin accumulating costs as a new asset from the moment they go in the ground. Tracking those costs separately from the outset is essential.
Insurance and government support. Check whether any industry support programmes apply in your situation — your adviser or New Zealand Winegrowers can guide you on what may be available.

Maintaining clear, block-level data throughout this process — dates of pull, costs incurred in removal, disposal of materials — will support both your financial reporting and any future replanting business case.

Scenario Modelling: Planning Through Uncertainty

The tension in the industry right now is sharp. Macdonald put it plainly: "There will certainly be a supply shortage in five years' time when the situation improves, and we won't have enough wine." That forward-looking warning sits alongside the immediate reality of unharvested fruit and broken contracts [2].

This is precisely where scenario modelling becomes valuable. Rather than making pull decisions based on this season's economics alone, growers and wineries benefit from working through multiple futures:

Base case: current contracts and pricing hold, no further demand deterioration.
Recovery case: demand stabilises and the sector recovers; if you pull now, what is the replanting cost and timeline to return to production, and does that align with when supply is likely to be short again?

Modelling these scenarios requires reliable, up-to-date block-level data: yield history, input costs, contract terms, and the carrying value of each vineyard asset. The quality of the model is only as good as the underlying records.

How Vineyard Software Supports the Transition

Managing a contraction is administratively complex. Cepaos supports wineries and growers with block and parcel management, field work records, phytosanitary application logs, and harvest intake traceability — so the historical data needed to inform pull decisions is already structured and accessible. Costing and budgeting tools within the platform allow teams to model production costs per block and assess which areas remain economically viable under different price and yield assumptions. For operations maintaining SWNZ certification through this period, keeping accurate records of inputs and activities at the block level remains a compliance requirement regardless of whether a vintage is harvested.

As the industry moves into a period of active restructuring — some blocks removed, some mothballed, some replanted — having a single system that tracks the status of every parcel, associated costs, and production history will be an advantage when the market turns.

Looking Ahead: Reasons for Measured Optimism

The contraction is real, but it is not the whole story. New Zealand Winegrowers brand general manager Charlotte Read noted that New Zealand represents only 1% of the world's wine, and its proposition as a producer of premium, distinctive, sustainable wines remains well understood internationally [1]. In-market data, Wilson noted, shows NZ wine outperforming the wider wine category in most export destinations, and the consumer base remains exceptionally loyal [2].

The recently concluded free trade agreement with India has generated genuine interest. India's first and only Master of Wine Sonal Holland said that India consumes $55 billion worth of alcohol and described it as "a very big market," adding that "New Zealand most certainly represents a great opportunity within that repertoire." Holland said the free trade agreement "most certainly represents" clarity, certainty and growing confidence between both nations, and characterised New Zealand wines as premium, exotic and diverse [1]. That opportunity will not be captured overnight, but it represents a structural tailwind for the recovery phase.

The businesses that emerge strongest from this correction will likely be those that made clear-eyed decisions during it: pulling blocks that genuinely had no future, preserving those that did, recording the financial reality accurately, and positioning themselves to move quickly when demand returns.

Cepaos is purpose-built winery and vineyard management software that helps New Zealand producers keep block-level records, track costs, and manage the data behind decisions like these. Explore what Cepaos can do for your operation.

Sources

Thousands of grapevines uprooted amid global oversupply of grapes — 1News, published 48 days ago. https://www.1news.co.nz/2026/08/27/thousands-of-grapevines-uprooted-amid-global-oversupply-of-grapes/
Wine glut drives growers to rip out vines — Farmers Weekly, published 8 July 2026. https://www.farmersweekly.co.nz/markets/wine-glut-drives-growers-to-rip-out-vines/