Wine exports up 18 per cent

Sauvignon blanc is New Zealand's most exported wine style.

New Zealand winegrowers say global demand is still outstripping supply for varieties such as sauvignon blanc, as overall wine exports surged to record levels in June.

Wine exports for the year rose 18 per cent to top $500 million for the first time, New Zealand Winegrowers said in its annual report.

The $512m of exports was from a record harvest of 185,000 tonnes - up 11 per cent on the 2004 record of 165,000 tonnes - and part of domestic and export wine sales of more than 100 million litres.

Winegrowers chairman Brian Vieceli said forecasts indicated exports would jump 17 per cent from around 60 million litres in 2006 to more than 70 million litres in 2007.

The value of exports rose 18 per cent over 2005 to $512 million.

Pinot noir exports grew 55 per cent to overtake chardonnay as New Zealand's second most exported wine style, but still trailed the top variety, sauvignon blanc.

"We've been carving out particular market niches for sauvignon blanc and pinot noir, which we do well, and the market's loving it," Winegrowers chief executive Phil Gregan, told Reuters.

Mr Gregan said New Zealand was unlikely to face the wine gluts and over production of grapes present in other countries.

"The yields per hectare have come down substantially in the past decade and the driver for local producers has been quality, quality, quality rather than quantity, quantity, quantity."

About 55 per cent of New Zealand production is exported, with Britain, Australia and North America the key markets.

Wine production has been forecast to jump 20 per cent in the year to June 2007, and by 10 per cent a year until 2010.

Mr Vieceli said the NZ industry was expanding exports to emerging markets such as Japan, Holland and Ireland.

"The record 2006 harvest will give us wine volumes to consolidate our presence in new markets and continue supply of our top three markets including the UK, USA and Australia," he said.

But the industry also faced challenges such as rising tax bills, a tough retail environment and higher production costs.

Last month industry officials in Australia reported that wine exports rose 12 per cent to a record in the 2006 financial year but the average price per litre fell by 9 per cent, to A$3.80 ($4.58) per litre. It was the fifth consecutive financial year that the average price for Australian wine exports had fallen as bumper harvests and tough competition depressed prices.

- NZPA