Wineries leave grapes on vine to protect prices

The spectre of rapidly growing bulk wine exports forced the wine industry to rein itself in this year, keeping a lid on volume to preserve prices.

In its report for 2009 out yesterday, New Zealand Winegrowers said the wine industry was in a new phase.

New Zealand had previously struggled to meet world demand but the challenge now was to sell the available wine in an increasingly competitive global market.

Warning signals emerged from the bumper harvest of 2008 - although exports and domestic sales volumes benefited from increased supplies there was also downward pressure on prices.

Exports of bulk wine quadrupled, from 5 per cent of total export volume to 20 per cent.

While bulk exports may relieve pressure on wineries in the short term, "in the longer term they may significantly impact our market positioning and the reputation of New Zealand wine and our brands", the report says.

New Zealand Winegrowers had vigorously promoted supply management in the past 12 months, and was pleased to see grape volumes kept at the 2008 level of 285,000 tonnes, chief executive Philip Gregan said.

"Given the weather we had, the crop could have been 100,000 tonnes bigger than that easily so we were very pleased the industry took that supply side message on, because we just can't get too far ahead of demand."

The standard practice was to thin the grapes down, but there had also been mature grapes left on the vine.

Quality had been an issue in 2008 but he said that had been addressed this year, with good weather helping.

Export values rose 24 per cent to $992 million for the year, meaning the industry is on the verge of reaching its long-held target of $1 billion in exports.

Sauvignon Blanc remains our most popular variety by far, accounting for 62.3 per cent of the 2009 vintage. Exports of the variety increased 37 per cent.

However, while Chardonnay remains New Zealand's second-most popular white wine, exports slipped 13 per cent after a move away from it internationally.

Gregan said the Kiwi industry didn't want to be too dependent on one variety and was working hard to diversify its product offering. Exports of Pinot Noir and Pinot Gris had grown.

Sustainability has been high on New Zealand Winegrowers' agenda and 85 per cent of capacity now comes within its Sustainable Winegrowing New Zealand programme.

The industry aims to meet benchmarks, such as reduced spray, water and energy usage.

BIG MONEY
* New Zealand wine exports were worth $992 million this year, just shy of the industry's $1 billion target.
* Australia, the UK and the US account for three-quarters of exports.
* Sauvignon Blanc remains the leader, at 62.3 per cent of the vintage.
* Sauvignon Blanc exports up 37 per cent.
* Exports of other varieties up 3 per cent.