Grape crop gives bumper chance

By SIMON HENDERY liquor writer

The grapes are in but the jury is still out on whether this year's record harvest will be a glut or a gravy train for winemakers.

The harvest is expected to be about 120,000 tonnes - 70 per cent up on last year's disappointing 71,000 tonne crop and well ahead of the previous record of 78,000 tonnes in 2000.

Across the Tasman, a record grape crop in Australia this year has led growers to dump or discount tens of thousand of tonnes of high-quality fruit.

But the New Zealand industry has its fingers crossed that its bumper season will turn out to be a blessing and provide an opportunity to meet demand from growing export markets, which last year were hungry for more quality product.

Philip Gregan, the chief executive of lobby group New Zealand Winegrowers, says the industry's ability to capitalise on this year's record crop will depend on two factors: the varietal mix of the harvest and the quality of the wine it produces.

"However you configure it, 120,000 tonnes is a lot more grapes than we've ever had before and we obviously have to sell a lot more wine."

Successfully dealing with this year's record harvest will involve carefully managing the mix of grape varieties as they go through the wine production pipeline.

Sauvignon blanc must be processed, bottled and sold within the next year, but red varietals - mainly pinot noir, cabernet sauvignon and merlot - will still be waiting to be bottled by then.

The trick for vineyards will be matching production capacity to the processing requirements of the different varietals.

This year's chardonnay harvest is expected to make a big jump from last year, when the harvest from the key chardonnay regions of Hawkes Bay and Gisborne was very low.

A solid rebound in production of cabernet sauvignon and merlot from Hawkes Bay is also expected.

Marlborough's harvest was also down on expectations last year, but a hefty lift in sauvignon blanc and pinot noir production is forecast this year as fresh plantings come on stream and cropping returns to more normal levels.

The country's total producing vineyard area has risen almost 14 per cent in the past year, from 11,300 hectares to 12,800ha.

Ongoing enthusiasm for planting new vines is expected to further boost that growth next year, and the producing area is forecast to grow a further 6 per cent to 13,600ha.

"We know the wineries are expecting very significant growth in exports this year because so many of them have been held back in the marketplace through lack of supply," says Gregan.

About 40 per cent of local production was sold overseas last year, bringing in $198 million.

If this year's production meets quality expectations and finds favour with foreign buyers, there will not be a glut of wine to sell.

Although there will need to be a big rise in export sales over the next 12 to 18 months if this year's bumper production is to be absorbed, wineries are confident that will happen.

Gregan says all the major wineries are expecting export growth of about 50 per cent over the next year.

"In nine to 10 months, if the industry hasn't made the progress it needs to make, then people may be using that word [glut], but it's too early to say," says Gregan.

"We know there's a big challenge in front of us but we also know there's that huge opportunity given we've been so short of supply over the last few years."

The combination of record harvests in New Zealand and Australia should be good news for local wine drinkers.

Increased availability of product from both countries is expected to keep competition on the supermarket shelves intense.

The industry is keeping a nervous eye on the rising New Zealand dollar, and the effect that will have on the ability to export.

But Gregan says producers will not have expected the dollar to stay at the US40c level, and will have factored a strengthening exchange rate into their long-term export planning.

Wineries were successfully exporting to the United States a few years ago when the exchange rate was at the US60c level, and there is no reason to assume they could not do so again.

Gregan says successful wine exporters take a long-term view on their pricing to overseas markets.

They establish a pricing strategy for their product, and are prepared to stick with it through exchange rate fluctuations.

The Australian Government has reacted to the grape glut and tough international competition within the industry by announcing an independent review of the country's wine tourism and export businesses.

Agriculture Minister Warren Truss said it was time to examine what needed to be done to maintain and improve wine producers' economic performance.

The Australian Government will provide A$450,000 ($537,000) over three years for a national wine tourism strategy aimed at bringing more visitors to cellar doors.