Grape crop 'no problem' but profit levels a concern

Photo / APN

Strong sales have driven a bumper grape harvest, according to New Zealand Winegrowers.

A total of 328,000 tonnes of grapes have been harvested, compared with 266,000 tonnes last year.

New Zealand Winegrowers chief executive Philip Gregan said he was comfortable with the size of the vintage, despite earlier concerns a harvest of more than 300,000 tonnes would take the industry back to 2008, when a big rise created an oversupply that helped erode wine, grape and land prices.

"New Zealand wine sales have been very strong in the past year, equivalent to 310,000 tonnes of grapes, and a larger harvest was needed in 2011 to rebuild inventory and support current and future sales," Gregan said.

Wineries and growers could look to the year ahead with cautious optimism, Gregan said. "The vintage should support sales growth of up to 7 per cent for June year end 2012, which will be another step forward in the recovery of the sector.

"Profitability levels remain an ongoing concern and recovery of winery and grower incomes should be a focus for all industry participants in the year ahead."

Wine writer Michael Cooper said the industry was under huge pressure.

"The talk within the industry is that the failures we're seeing, about every two months another winery goes under, that's going to clearly keep happening and the size of this harvest is not going to help," Cooper said.

Deloitte partner Paul Munro said there were signs of some strengthening of demand.

"Certainly no reason to panic but I'd be cautious about whether there'll be sufficient demand ultimately to absorb what's a reasonably significant increase in volume on previous years."