Downturn hitting local wine industry hard

Many winegrowers are selling up as a combination of overproduction, falling prices and the global recession hits the local industry hard.

Deloitte partner Paul Munro said the number of wineries and vineyards for sale in Marlborough - home of New Zealand's signature style, sauvignon blanc - had soared from about 30 last Christmas to about 150.

He predicted that some winemakers who had invested their entire savings in the industry with high debt levels would struggle. Some would go under.

Bayleys Marlborough rural manager John Hoare said he normally had about a dozen properties on his books - today he has 50-plus, and few are selling.

As wine prices fell and grape prices followed, land prices had also slumped in the past two years from about $250 a planted hectare to $150.

He said corporate buyers were watching and waiting. "I wouldn't be surprised if ... the big got bigger and the small got out."

Growers have been under pressure to cut back after a record harvest in 2008 created millions of litres of oversupply and eroded the price of New Zealand wine overseas.

Now the problem is attracting overseas attention. Two months ago, British wine critic Oz Clarke warned the industry that it was ruining its reputation by flooding UK supermarkets with cheap sauvignon blanc.

And this year, a global industry outlook from the Bloomberg business news agency includes the worrying prediction: "New Zealand wineries will be in trouble."

United States-based analyst John Mariani wrote: "The country's recent prodigious harvests have glutted the market for their overly fruity punch-like style and many fans want to move up in quality."

Some producers and sellers have suggested a European-style appellation system but others say this would stifle the industry's creativity.