Small wineries struggling to survive

The financial fate of small wineries has got the industry worried.

New Zealand Winegrowers said the number of wineries had boomed from 130 in 1990 to around 530 now. But chief executive Philip Gregan said it was clear that many were not as profitable as they should be.

His main concern was for smaller wineries producing less than 22,000 cases a year, which focused on the domestic market. Bigger companies could generally look after themselves, he said, while exporters tended to be more experienced.

The body is surveying wineries, with the help of accountants Deloitte, to gather hard numbers.

Gregan said some wineries might not be as profit-driven as others. "A lot of people come into the industry with lifestyle as one of the motives ... so maybe they don't have the same sort of profit ambition as more purely commercial enterprises."

Continued increases in excise tax on domestic wine sales - now around $20 a case - were hampering profitability, Gregan said. Many small wineries were not passing tax increases on and some were even reducing prices to make sales.

Garry Major, of small Waikato winemaker Mystery Creek Wines, said his company was set to make a loss this year but would have been in the black without the tax.

Mystery Creek produces about 5000 cases a year - excise tax on that is around $100,000.

Major praised Australia's move to lift the threshold at which wine taxes kicked in and suggested the first 5000 cases a winery sold each season should be exempt.