Winemakers gloomy as trade gets tough

Winemakers in the country's second largest grape-growing region expect tough times in the year ahead, according to a survey of business confidence.

Forty per cent of Hawkes Bay wineries said trading conditions had worsened in the 12 months to June this year and 59 per cent expected this financial year to be worse again.

The Markhams MRI survey found the industry mood in Hawkes Bay was much sourer than in the largest grape-growing region, Marlborough, where only 23 per cent of producers expected trading conditions to worsen over the coming year.

The pessimistic outlook in Hawkes Bay was despite winemakers' upbeat assessment of the quality of this year's grape harvest - 53 per cent described it as excellent.

Increasing competition, high exchange rates, and increases in taxes and interest rates were cited as reasons for the decline in trading conditions.

In Hawkes Bay, 73 per cent of wineries expected sales margins to decrease over the coming year compared with 54 per cent in Marlborough.

John Kemble, founder of Hawkes Bay's Kemblefield Estate Winery, said although the environment was "not easy", August had been his company's second best month ever for domestic sales.

Kemblefield had not taken part in the Markhams survey and Kemble said he was slightly surprised by its negative findings.

"We're looking for good things in the coming twelve months," he said.

Nationally, the wine industry continues to experience frenetic growth. In May the number of wineries topped 500 for the first time.

But releasing its annual report last month, industry group NZ Winegrowers said that despite record sales and strong growth forecasts, the strong dollar, rising costs and increased taxes would put pressure on profitability.

Marlborough, which now has just under 10,000ha or almost half of the country's producing vineyard land, has benefited from its status as the home of New Zealand's iconic export white wine varietal sauvignon blanc.

In Hawkes Bay, which has 4300ha of producing vines, vintners are more reliant on the domestic market.