Poor harvest leaves sour taste for NZ Wine Company

By SIMON HENDERY

The impact of last year's poor grape harvest has flowed onto the books of one of the country's two listed wine producers.

The AX-listed New Zealand Wine Company yesterday reported a 46 per cent drop in its half-year profit.

The Marlborough-based producer of the Grove Mill and Sanctuary wine labels said its unaudited net profit for the six months to December 31 was $321,000, compared with $596,000 for the same period the previous year.

Sales revenue for the half-year was down 23 per cent to $3.35 million.

Chairman Mark Peters said despite the first-half profit drop, the company was expecting a better second-half result.

But Peters said its full-year result, for the year to the end of June, was likely to be "markedly below" the record profit of $1.08 million reported last year.

Peters said a return to growth in earnings was expected in the 2004-2005 year. He cited two main reasons for the drop in income:

* A change in buying pattern by major customers in Australia and the UK, who had shifted from placing bulk orders to "just in time" ordering, resulting in reduced stock levels in the distribution chain.

* Last year's frost-affected vintage, which resulted in lower volumes and higher costs.

While an expected surge in wine production over the next few vintages was expected to cause headaches for the industry, Peters said: "We firmly believe that well-managed and efficient companies with quality product, good brand image and good marketing will be successful going forward."

Oyster Bay Marlborough Vineyards, which also trades on the AX, has yet to file its half-year result.