Never mind the quantity, feel the quality

Growers are happy with the 2010 harvest. Photo / Sarah Ivey

The wine industry is going through the toughest market conditions of the past 20 years but the 2010 vintage is expected to produce excellent quality because of the warm weather in April and March, New Zealand Winegrowers' says.

The organisation released its 2010 vintage results yesterday, and despite profitability concerns and harsh market conditions, the industry has achieved modest improvements on addressing the supply and demand balance.

New Zealand Winegrowers' chief executive Philip Gregan said 2010 would be a good vintage, and although wineries were cautious not to hype up the quality before "the wine is in the bottle", the anecdotal evidence was that 2010 is going to produce "very, very, very good wine".

Gregan said he was very excited at the prospect, and expectation, of a high-quality vintage but added the final test would be in the bottle.

"If ever there is a recipe for high-quality wine to come out of the New Zealand industry, this is it, this is one of them," Gregan said.

The results showed Marlborough produced 69 per cent of the country's wine, the Hawkes Bay produced 15 per cent, Gisborne 7 per cent and other regions such as Nelson and the Wairarapa produced 9 per cent.

The 2010 vintage produced 66 per cent sauvignon blanc, 10 per cent chardonnay, 9 per cent pinot noir, 5 per cent of pinot gris and 3 per cent merlot. Other varieties accounted for 7 per cent.

High rainfall in January and early February on the East Coast of the North Island caused concern but good weather in March and April and low rain fall during the harvest have been touted to improve quality.

"They are a pretty happy bunch of people at what they have in their tanks for 2010."

Gregan said over-production in 2008 and tough trading conditions had hit wineries and growers hard.

"We are very concerned with profitability in the industry at the moment," he said.

"The supply imbalance of 2008, global financial crisis and the high New Zealand dollar against the pound and US dollar, all these things have come together and hit wineries and growers profitability.

"It is very clear that some growers and wineries are not operating profitability. These are very tough times, they are without a doubt the toughest times in the past 20 years in the industry," he said.

"Despite the tough global environment, export volumes have risen 27 per cent over the past 12 months. Over the next year we expect volumes to remain near current levels as wineries draw down on existing inventory."

While Gregan does not expect the industry to grow substantially over the next 12 months, he doesn't expect export volumes to reduce either.

The 2010 New Zealand grape harvest totalled 266,000 tonnes, 19,000 tonnes smaller than the 2009 crop, which was in line with the pre-harvest forecast.

Gregan said over the next year the focus would be on diversifying away from traditional markets such as Britain and Australia, and focusing on expanding into Northern Europe, North America and Asia.

2010 RESULTS
* Total vintage 266,000 tonnes, 7 per cent lower than 2009.
* Wine quality is expected to be high.
* Export volumes up 27 per cent over the past year.
* Biggest overseas markets are Australia and Britain.