Poor harvest aided by last year's good stocks

By SIMON HENDERY liquor writer

The flow of last year's wine through the production pipeline will help to ease the effects of a big drop in the grape harvest this year.

Industry group Winegrowers has reduced its forecast for the size of this year's frost-affected grape harvest to 45 per cent below last year's crush.

Its prediction a 65,000-tonne harvest compared with the 118,700 tonnes gathered last year is in line with a forecast from the country's largest winemaker, Montana.

Montana said last week that it expected its harvest to be down 45 per cent, a result of severe frost damage in Hawkes Bay and other grape-growing regions.

Winegrowers chief executive Philip Gregan said the impact of the reduced harvest on the industry would be mitigated to some extent by the good level of stocks from last year's vintage.

"Vintage 2002 was a record year for varieties such as chardonnay, cabernet sauvignon, merlot and pinot noir, so there will be good stocks of these wines to satisfy markets," he said.

"In terms of sauvignon blanc generally production will be down on last year ... "

Montana and the country's second largest producer, Nobilo, have both said that reduced production was likely to lead to increased prices.

Being predominantly a fixed-cost business, winemakers face higher costs per bottle during times of reduced vintages. The strengthening New Zealand dollar has also eaten into export returns.

However, strong competition from imported Australian wines will put pressure on local winemakers to keep domestic prices down.

Bill Spence, general manager of Matua Valley Wines, said Matua's harvest was expected to be down 22 per cent this year.

The company, majority owned by Foster's Group, was contemplating price rises but would be reluctant to move because prices could fall again if next year's harvest spiked.

New grape plantings mean a likely record crush next year could force prices down, provided the industry is not hit by frosts.

"We don't want to keep moving our prices around all the time," Spence said. "We'd prefer to keep stability in the marketplace."